Olympics are a great success but won’t solve economic crisis

 
Allister Heath
FOR those of us lucky enough to have been at the Olympic Park in Stratford yesterday or at one of the other venues, the scale and success of the Games was a wonder to behold. Tens of thousands of happy spectators from all over the world, brandishing flags of an extraordinary range of home nations, were greeted by a vast army of cheerful and helpful volunteers – as well as members of the real armed forces and more police officers than I have seen since the riots. Everybody was good-humoured; at the event I attended, the crowd cheered the winners in a display of genuine Olympic spirit.

Even the tubes were working fine, with vast numbers of passengers accommodated with few problems. The Olympic Park itself is an impressive piece of regeneration; the long forgotten River Lea once again afforded a starring role. There were glitches, of course, with Wembley experiencing issues with card payments. Yet so far at least, the Games have been a typically modern British success story.

What of the empty seats? One factor is the Bribery Act, which has made many companies – and especially the public sector – much less likely to accept hospitality. Many of the companies that paid a fortune for sponsorship rights or otherwise paid for tickets haven’t been able to use all of them. The other issue is cost: all markets can clear if the price is set right. Empty seats can mean only one thing: the tickets are too expensive, or at least that the less popular events are being priced too aggressively.

The solution must be to engage in that old trick: to price discriminate and to sell tickets expensively to those willing to pay more – and cheaply to those who are not. Everybody does this: airlines sell their early tickets more cheaply and then the price keeps going up, as people desperate to travel at short notice are willing to pay an exorbitant cost.

The opposite is true of the Olympics: prices need to be slashed to rock-bottom to get rid of excess capacity, while unused sponsor tickets should be recycled and put back on sale. That means a push to sell tickets at knock-down prices: better to get £3 than nothing and an empty stadium.

Yet while such issues are making the front pages, much of the public won’t care. They are not interested in the problems or the politics: they are enthralled by the sporting spectacle and are desperate for Team GB to triumph. But while special celebrations do wonders for the national mood, the effect rarely translates to consumer and business sentiment. It is like a holiday or a night out partying – people forget their problems and let their hair down – but they soon return to normal when they get home or wake up the next morning.

And putting on a good show won’t be enough to sway global firms into investing in the UK; businesses are more interested in tax, planning laws, employment regulations, the skills and motivation of the workforce and prospects for economic growth.

That is not to say that such major events have no lasting impact on the national psyche. France’s victory in the 1998 world cup helped unify the nation, symbolising as it did the great contribution of immigrants to French national life. I suspect that 2012 will see the Union Flag rehabilitated as a mainstream, inclusive symbol of the United Kingdom in all of its contemporary and ancient glory and diversity. But there will be no sudden shift of mood on the economy, no sudden spurt of investing and hiring. So let’s enjoy the Olympics for the sense of togetherness they are creating, as well as for the athletes’ sporting prowess – but let’s not pretend that it will turn out to be a substitute for tough economic decisions.

allister.heath@cityam.com
Follow me on Twitter: @allisterheath