UK Markets close in 8 hrs

Olympics 'Could Turn A Profit' For Britain

(c) Sky News 2012

The London Olympics could help produce £13bn of inward investment over the next few years for UK plc, according to predictions from the Department of Trade and Industry.

The projected income happens to be greater than the £9bn the department says the Games  have cost, meaning the event would make a profit for the British economy.

Along with increased tourism, the Olympics is bringing with it the largest ever trade and investment event in the UK - held at Lancaster House in central London.

It opens with the Global Investment Conference, which will be attended by Prime Minister David Cameron along with key players in the economic world.

They include the International Monetary Fund's managing director Christine Lagarde and Google (NasdaqGS: GOOG - news) 's executive chairman Eric Schmidt.

Business Secretary Vince Cable told Sky News: "There's what we call a business embassy base, where British businesses will be able to meet on a continuing basis with very large numbers of high level people coming though London.

"There will be a global conference today with some top level people coming to speak and interact with us, and a constant process of conferencing, discussions and negotiations, an estimate of around £13bn has been produced as a plausible figure for the kind of business that could be generated."

Asked if it was realistic to suggest that the Games could make a profit, Mr Cable added: "That is realistic… We do believe we can turn the Olympics into not just a great sporting spectacle, which it will be, but also into a great opportunity for the UK from a business and economic point of view."

The Global Investment Conference comes a day on from the announcement that the UK's economic output shrank by 0.7 % in the second quarter of this year.

Some businesses do not share the Government's optimism over the event. Dominic Geraldi, general manager of Pimlico Plumbers said the Olympics are not good for business.

He said: "Obviously it's going to benefit some industries such as hospitality, transport, tourism and retail.

"But for the majority of businesses, particularly in London, it will have a negative and disruptive effect. It's taking my staff much longer to get to jobs."

Forman's, a Hackney-based smoked salmon manufacturer, has started a hospitality business on the doorstep of the Olympic stadium but owner Lance Forman says business has been discouraged in the area.

He told Sky News: "A lot of businesses don't get it. We have tried to get them to come here and a lot haven't worked it out.

"I think they've had problems with Locog. The message has come out loud and clear to businesses - 'you can't do this, you can't do that; you're infringing the brand here' and it's very negative.

"This is the biggest marketing opportunity for UK plc and for London that we are going to have for 50 years. If we don't seize that now, every CEO on the planet is going to be here, if we miss that opportunity that will be the biggest waste of £12bn." 

So where will this predicted £13bn come from? Much is resting on the success of the Global Investment Conference and 17 other business summits taking place in Lancaster House.

The summits will bring together over 4,000 of the world's top business leaders. These and associated events are expected to generate an additional £1bn of sales for British companies.

It is hoped UK-based companies will also win up to £4bn in longer-term contracts and the UK also could pull in a further £6bn of direct foreign investment. With the £2.3bn expected from a tourism boost, that makes £13bn.

Some four million extra people expected to visit the UK from 2011 to 2015. That is not just down to the Olympics but also an accompanying advertising campaign.

This includes TV ads fronted by stars such as Dame Judi Dench and Slumdog Millionaire's Dev Patel.

It is important to remember that all this good news is merely predicted as opposed to the hard, indisputable facts of the disappointing GDP figures.

But an undoubted boost is the announcement from the new owners of the Battersea power station that their £8bn investment to the site could create up to 33,000 jobs.

The development could include homes, offices, shops and a new transport hub attached to the Northern line.

It has taken decades to redevelop the power station - but it is hoped the Olympics can work its magic on the British economy with greater haste.

More From Sky News