Olympics will boost economy in Q3

31/July/2012

London 2012 will provide something of a boost to the economy in the third quarter of the year, the Institute for Public Policy Research (IPPR) has said.

Tony Dolphin, chief economist at the institute, said the Games would have a "small" but "positive" impact in terms of growth.

"I don't think it will have a lasting impact in terms of growth once the Games are finished," he said.

It comes after official data showed the economy went further into recession in the second quarter of the year, contracting by 0.7 per cent.

"We have just had this horrendously bad number for the second quarter, I would be very surprised if the third quarter doesn't show a rebound in growth, partly because the Olympics will give a little boost to growth," Mr Dolphin said.

He said the government needs to shift its policy focus in order to encourage sustained growth in the economy.

"It is clear from the figures that private sector households and businesses just lack the confidence that they need to spend more money," he said.

"Households will be very cautious and businesses are reluctant to commit to big investment projects."

Government spending on infrastructure, roads and rail would give the private sector the confidence it needs to increase its spending, he added.