The 2012 Olympics are unlikely to provide a substantial boost to the British economy, according to credit rating agency Moody’s.
In a report on the London Games, Moody’s warns that GDP figures have already felt the impact of infrastructure spending on the Olympics and further benefits are likely to only be short-term.
The report will be a setback to the Government, which has viewed the Olympics as a potential driver of consumer spending in the third quarter of 2012 that could lift UK out of its double-dip recession.
Moody's says that while increased visitor numbers could boost sales of retail and consumer products, any longer-term benefits will simply be through the increased visibility of brands and not extra sales.
Richard Morawetz, senior credit officer at Moody’s added: "We expect the net impact of the Olympics on UK tourism will be positive overall, but far less than gross visitor numbers would suggest."
He also dampened hopes that transport companies, such as rail and bus providers, will be benefit from a boom in passenger numbers."
The benefits to earnings for the transport and infrastructure sectors may not be clearcut, as lower-margin tourist travellers may displace business travellers during the games,” Mr Morawetz explained.
Hotels in London are expected to receive a boost from increased prices, securing greater revenue per room, but this will lead to tough comparisons for 2013, Moody's claims.
The report adds: “Although the 2012 Summer Olympic and Paralympic Games are expected to provide a huge marketing opportunity for companies, the benefits are likely to be largely short-lived, providing only a temporary fillip to companies’ earnings.
“Moody's expects that corporate sponsors will benefit most from the Games. However, given the largely one-off impact of the Games on corporate profits, the rating agency does not expect that this alone will have an impact on its ratings, which tend to take a longer-term view. “
“Overall, we think the Games are unlikely to provide a substantial macroeconomic boost to the UK during 2012. However, a number of individual sectors and credits look well placed to benefit from the short-term fillip that the Games should provide.”
telegraph.co.uk
In a report on the London Games, Moody’s warns that GDP figures have already felt the impact of infrastructure spending on the Olympics and further benefits are likely to only be short-term.
The report will be a setback to the Government, which has viewed the Olympics as a potential driver of consumer spending in the third quarter of 2012 that could lift UK out of its double-dip recession.
Moody's says that while increased visitor numbers could boost sales of retail and consumer products, any longer-term benefits will simply be through the increased visibility of brands and not extra sales.
Richard Morawetz, senior credit officer at Moody’s added: "We expect the net impact of the Olympics on UK tourism will be positive overall, but far less than gross visitor numbers would suggest."
He also dampened hopes that transport companies, such as rail and bus providers, will be benefit from a boom in passenger numbers."
The benefits to earnings for the transport and infrastructure sectors may not be clearcut, as lower-margin tourist travellers may displace business travellers during the games,” Mr Morawetz explained.
Hotels in London are expected to receive a boost from increased prices, securing greater revenue per room, but this will lead to tough comparisons for 2013, Moody's claims.
The report adds: “Although the 2012 Summer Olympic and Paralympic Games are expected to provide a huge marketing opportunity for companies, the benefits are likely to be largely short-lived, providing only a temporary fillip to companies’ earnings.
“Moody's expects that corporate sponsors will benefit most from the Games. However, given the largely one-off impact of the Games on corporate profits, the rating agency does not expect that this alone will have an impact on its ratings, which tend to take a longer-term view. “
“Overall, we think the Games are unlikely to provide a substantial macroeconomic boost to the UK during 2012. However, a number of individual sectors and credits look well placed to benefit from the short-term fillip that the Games should provide.”
telegraph.co.uk
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