News

Visa report predicts biggest ever Olympic and Paralympic Games consumer spend at London 2012 - £5.1 billion boost to UK economy

• UK economy to benefit from a record breaking spending injection during London 2012
• Consumer spending set to hit £750 million, the biggest ever consumer spend at an Olympic and Paralympic Games
• Visa celebrates 25^th anniversary as global Olympic Games sponsor 

11 July 2011 - The UK is set to benefit from a £750 million consumer spending boost in the seven week period of next year’s London 2012 Olympic and Paralympic Games, the biggest ever consumer spend increase expected for a host market. According to a report released today by Visa Europe to mark the 25^th anniversary of Visa’s global sponsorship of the Olympic Games, this record breaking spending boost will deliver a sustained stimulus worth a total of £5.1 billion to the UK economy by 2015.

Key report findings:

Read the full report and watch the video.

The report: Golden Opportunity - London 2012 Olympic and Paralympic Games Expenditure and Economic Impact, found that during the intense three week period between the opening and closing ceremonies of the Olympic Games, the economy will receive a £621 million spending boost. This will be supplemented by a further £129 million spending boost during the Paralympic Games, taking the total spend increase to £750 million over the entire seven weeks, an uplift of 18.5% above what would be expected over the same period had the Games not taken place.  

After the Games are finished the longer term economic uplift is expected to deliver a sustained stimulus worth a total of £5.1 billion to the UK economy by 2015. This represents approximately 3.5% of the overall expected growth of the national economy over the 2013 – 2015 period.

Visa’s Olympic and Paralympic Games insight:

The report draws on historical Visa cardholder spending data from the Turin 2006 Olympic and Paralympic Winter Games, Beijing 2008 Olympic and Paralympic Games, Vancouver 2010 Olympic and Paralympic Winter Games, 2010 FIFA World Cup™ as well as a detailed review of other existing economic data from previous Olympic and Paralympic Games.

These data sources have enabled the development of an econometric model which projects the effect the London 2012 Games will have on consumer spending. The report is solely focused on expected spending levels among both overseas visitors and UK residents. It does not quantify additional benefits to the economy such as stimulus to the construction sector and long term benefits of improved infrastructure, therefore it provides unique insight into how consumer spending alone will impact the economy.

As the report is based on real spending in countries that have hosted past Olympic and Paralympic Games or other major sporting events, and Visa accounts for more than £1 in every £4 spent in the UK, it offers unparalleled insight into how the UK population and visitors will spend during the Games period in 2012.

Report findings:

The positive impact to the economy will be largely generated by a major influx of foreign visitors to the UK. Over the seven week Olympic Games period international visitors are expected to spend a total of £709 million. This significant international spending boost is higher than previous Games. International expenditure at Sydney 2000 and Athens 2004 was approximately half this figure. At Beijing 2008 international expenditure was estimated at $US150 million (£93 million) for an equivalent three week period. The higher level of spending expected at London 2012 can be attributed to the advantageous position of London with respect to Europe and other key international markets (resulting in increased visitor numbers) and the higher costs associated with visiting London.

Domestically, consumer spending is expected to increase by £41 million over the full Olympic and Paralympic Games period.  This is a first for a host market as a domestic spending slump usually takes place during Games time. The report attributes this to ‘spending switching’, as British residents switch from traditional patterns of summer spending and get into the Olympic spirit, stocking up on supermarket supplies and watching The Games at home. This feel-good spending is in line with patterns of UK domestic expenditure witnessed during previous Olympic Games and the 2010 FIFA World Cup™.

The retail, leisure and travel sectors look set to be the biggest winners of the Games, benefiting from a combined spending injection of £508.4 million in seven weeks:

• Supermarkets are set to see a £79.9 million boost in spending
• High street retailers, such as department and clothing stores, will benefit from an extra £184.7 million
• The entertainment and food and drink industry will benefit from an extra £81.5 million
• The hotel sector will benefit from a £122.6 million spending uplift
• Airlines, car hire and other travel sectors will see a £39.7 million increase

The knock-on effect of this increased consumer spending translates into widespread economic impacts across the board. A net £1.14 billion increase of goods and services produced (economic output) across all sectors is expected in order to meet demand, resulting in a potential £229 million net increase for UK resident’s incomes over the seven week period. This will be generated from higher wages (overtime and increased Games time rates); additional rent for those who are renting their homes out to visitors or charging higher Games time rental rates; and profits across all sectors.

Longer term, this Olympic-sized spending legacy is expected to increase economic output by £1.37 billion per year to 2015 – a total £5.1 billion stimulus for the UK economy over the four years. Additional incomes to UK residents will be generated worth £296 million per year and an average of 17,900 jobs per annum will be sustained across the UK economy.

Marc O’Brien, Managing Director, Visa UK said: “As the report shows, the UK will benefit from an immediate positive economic impact as a result of a large increase in consumer spending during the Olympic and Paralympic Games. Much like the World Cup, British consumers are expected to boost supermarket sales by £80 million as Britain lives up to its reputation as a nation of sport lovers, meaning for the first time domestic spend is forecast to grow during a Games, previously unheard of for a host market.

“What’s so encouraging for the wider economy is the ripple effect this will cause: economic output will increase and the benefits will be felt in people’s pockets as incomes increase. This immediate positive economic boost will translate into sustained economic stimulus and job creation, impacts which will be felt long after the Games have finished.”

The Mayor of London Boris Johnson said: “I am determined that hosting The Games in 2012 will transform the wider job prospects and economic future for Londoners - this is already happening, and we can and must sustain that effect for years to come.

“This report shows we are on track to do just that, with The Games set to inject billions of pounds and thousands of jobs into the London economy even after the greatest show on earth has left town. I have no doubt that when we welcome the world to London during the summer of 2012, the capital’s first class attractions, shops, pubs and hotels will all see a massive boost as a direct result of The Games."

Colin Grannell, Head of Partnership Marketing, Visa Europe said: “The countdown to London 2012 has well and truly begun and as the nation gets into the Olympic Spirit, the findings of this report also signal good news for the economy. As a global sponsor of the Olympic and Paralympic Games, Visa provides retailers across the UK the chance to share in the Olympic Spirit. Visa’s relationship with the Olympic Games stretches back 25 years and this long heritage sets us in good stead to make London 2012 the best Games ever.”

Read the full report and watch the video.

About Visa Europe

In Europe, there are 430 million Visa debit, credit and commercial cards. In the 12 months ending March 2011 those cards were used to make purchases and cash withdrawals to the value of €1.6 trillion. 12.5% of consumer spending at point of sale in Europe is with a Visa card, and more than 70% of that is on Visa debit cards.  

Visa Europe is owned and operated by more than 4,000 European member banks and was incorporated in July 2004. In October 2007, Visa Europe became independent of the new global Visa Inc., with an exclusive, irrevocable and perpetual licence in Europe. As a dedicated European payment system it is able to respond quickly to the specific market needs of European banks and their customers - cardholders and retailers - and to meet the European Commission’s objective to create a true internal market for payments.
 

Visa enjoys unsurpassed acceptance around the world. In addition, Visa/PLUS is one of the world’s largest global ATM networks, offering cash access in local currency in over 200 countries.

For more information, visit http://www.visaeurope.com/

About SQW

SQW, which compiled the report, is a leading economic research agency working for public, private and not-for-profit organisations. Previous published work includes economic and sustainable development research projects for clients including HM Treasury, Department for Education, Department for Culture, Media and Sport, Department for Business and Innovation and Skills, UK Trade and Investment.