LONDON — With the British economy caught up in a global financial crisis, organizers of the 2012 Olympics are warning that plans for staging the Games may have to be scaled back.
Treasury chief Alistair Darling released figures last week showing that Britain’s economy shrank 0.5 percent in the quarter that ended in September, a sharper contraction than expected and a clear sign that the country had entered a recession.
The news reinforced fears that the 2012 Games might resemble the “austerity Olympics” held when London last hosted the event in 1948, when Britain was still recovering from World War II.
“The government was already finding it hard to attract private sponsors even before the credit crunch, so the current crisis is a further setback,” said Stefan Szymanski, a sports economist at the Cass Business School in London.
While no one is talking about cutting athletic events, Olympics organizers admit that the global financial crisis has hampered efforts to attract private funding for key construction projects.
Already, they have been forced to move some events, such as fencing, to a shared venue.
Organizers have vowed to do all they can to avoid overruns on the $17 billion infrastructure budget, but say they may have to tap into reserves from the British government’s contingency fund of $1.9 billion to help pay for the athletes’ village and a $700 million media center.
The Olympic Development Authority, the group responsible for building venues and infrastructure for the Games, had hoped to raise $900 million from the private sector for the $2 billion Olympic Village.
Originally designed to include 4,200 apartments for 17,000 athletes and coaches, the village has been scaled back to 3,300 apartments, with talk that the number might have to be reduced further still, to 2,700 apartments.
This means that each apartment might have to hold five or six athletes.
Despite the euphoria of July 2005, when London won a global competition to host the Games, no one here ever believed they would be on par with the ones held this year in Beijing, which cost more than $40 billion.
“We cannot and do not expect to compete with Beijing in terms of scale, and I don’t believe we should try,” John Armitt, chairman of the Olympic Delivery Authority, recently told London’s legislative assembly.
“London will be different, and we should celebrate that difference.”
Szymanski said that it’s possible the International Olympic Committee will be sympathetic to London if it asks to downscale its original plans.
“But it ultimately has the threat of taking the Games away and giving them to someone else — and since Paris claimed in 2005 that it already had the infrastructure in place, this may be a credible threat,” he said.
