The economic realities of Britain's Olympic legacy
Anyone who watched the opening ceremony cannot have been struck by the incredible spectacle that was presented.
Given that the opening ceremony in Beijing was stupendous in terms of the technical choreography there were many who doubted our ability to achieve a similarly memorable event; especially bearing in mind that the 'handover' was effected by sending a London bus to China.
Danny Boyle and Frank Cottrell Boyce achieved a demonstration of the historical origins and development of the industrial and creative genius that made this nation the envy of the world.
Writing in Sunday's Observer Boyce described how it the ceremony was possible; a mixture of love of Britain's fabulous heritage and an absolute freedom of ideas that is all-too-frequently absent in 'normal' business:
Danny created a room where no one was afraid to speak, no one had to stick to their own specialism, no-one was afraid of sounding stupid or talking out of turn. He restored us to the people we were before we made career choices - to when we were just wondering. We shared the things we loved about Britain - the Industrial Revolution, the digital revolution, the NHS, pop music, children's literature, genius engineers.
Importantly, let's hope that what people across the globe witnessed will act as a stimulus to much-needed economic growth and investment in the UK.
Unfortunately, recent history of holding Olympic Games does not guarantee success. Indeed, some commentators are warning that we should not expect the games to provide that economic 'bounce' to take us out of recession.
Research has been carried out by Citigroup Bank considering the economic effects that have occurred before, during and after Olympic Games held since Tokyo in 1964.
As Citigroup's UK economist Michael Saunders has discovered, very rarely do these events produce the economic gain that is hoped for.
Saunders' research demonstrates that in the period up to the commencement of the games, economic growth occurs due primarily to construction of the stadia.
However, Saunders has discovered that in every country apart from America, which hosted the 1996 Olympics in Atlanta, the two quarters before the Games were stronger that the two quarters after.
As Saunders also shows, the greatest slowdowns have occurred after the Games held in Seoul (1988), Barcelona (1992) and Beijing (2008).
The Spanish Games are usually held up as an exemplar of what Olympics can do in generating economic activity.
Anyone who visited Barcelona before work commenced on its stadia and facilities will attest to the dramatic transformation that occurred.
We are already seeing that whilst the Games may be particularly good in the parts of London where events are taking place, most especially Stratford, business is significantly down in the Central shopping area and in the West End where theatres are experiencing a drop in those wishing to see shows.
Samuel Tombs of Capital Economics has stressed that whilst there may be a temporary fillip to the economy through increased spending on beer and food (though Olympics are different to football tournaments) there are bigger threats that still exist; most especially from the Eurozone which still gives great cause for concern.
Even worse, according to Tombs, workers who were employed during the construction of the stadia and ancillary facilities may find it difficult to find new jobs.
The need to create economic growth to ensure that these people do not become long-term unemployed is essential; hence the commendable effort by Cameron and other members to use the Olympics in London as an opportunity to emphasise that this country is 'Open for Business'.
Michael Saunders makes the very important point that whilst the Olympics are a useful distraction in the midst of our current economic problems, they should not be seen as an alternative to formal policy.
As we are all becoming aware, creating economic growth is not easy.
Therefore,if the Olympics provide a way to drum up business by emphasising the creative advantages of being in Britain, then why not.
Accordingly, Lancaster House has become the base for a series of meetings to be held during the Games to attempt to achieve £3 billion worth of investment through increased tourism and overseas investment.
The launch of these meetings last Thursday was particularly significant in that as well as including some of the 'great and good' of the world's financial systems (IMF Chief Christine Lagarde, Mario Draghi who is governor of the European Central Bank and Secretary General of the OECD Angel Gurria), business leaders such as Google Chair Eric Schmidt and Cisco's John Chambers also attended.
What emerged from this meeting suggests that even though there is much to be optimistic about, we must remain cautious.
Eric Schmidt demonstrates this. Whilst he applauds the culture of "unleashing" creative young entrepreneurs he made the following statement:
"Global companies are going to go where the growth is. We will move from a place where the government is doing the wrong things to a place where the government is doing the right things."
John Chambers reinforced this point by making plain his belief that jobs can move with "tremendous speed," and that if the expectations of business cannot be met in one location, "[they] will be left behind."
There is clearly a great deal of pressure on policy-makers in Government to ensure that they are able to create conditions that will inculcate growth and the creative flair and genius that was being eulogized at Friday's opening ceremony.
And creative genius is precisely what some overseas investors see as the major attraction of being in Britain.
Fascinatingly, Chinese companies see opportunities to develop their own brands that will be sold in this country.
One such company is Bosideng which is a Chinese equivalent of our Marks and Spencer and has just opened its first store in the West End of London.
Another is the Chinese fashion label Eve which intends to open a London store and has declared its intention of being seen as a "Chinese [Alexander] McQueen"
Bosideng with sales in excess of £800m last year and operating over 8,000 stores and has spent some £35 million on its six-storey store which will also act as its headquarters for opening stores other stores in this country and Europe.
Notably, whilst the trend in recent years is for British retailers to source its procure low-cost produce from China, Bosideng has stated that only ten percent of what it sells will be made there. This heralds an opportunity for the creation of job making their clothes in the UK.
Wayne Zhu who is the Chief Executive for Bosideng in the UK believes many other Chinese retailers will follow. As he acknowledges, what makes Britain such a great place is the talented designers this country consistently produces which they have worked with in order to make their clothes distinctive.
As Bosideng's retail director Jason Denmark stresses, this allows the ability to sell a brand that "draws on Chinese history and inspiration but [which] has a UK feel."
The Chief Executive of Eve, Xia Hua, a former politics professor, has stated the company's intention to invest £10 million in a London head office next year and is in talks with Harrods and Selfridges.
As Hua recognises, what is being done attempted is very different to the norm:
"There are a lot of western brands that go to China and achieve business success but not that many Chinese brands that have succeeded in western markets."
Bosideng and Eve are following other Chinese companies who perceive that Britain has the ability to create and innovate that will enable them to develop market share in this country and Europe.
The reason for Chinese investment is that the country has a huge reserve of cash that comes from its stockpile of foreign exchange reserves; believed to amount to some £2 trillion.
Aman Wang, the London-based head of KPMG's global China practice, believes that the reasons for Chinese willingness to invest in the UK includes flexible labour market, an abundance of people with managerial and financial talent, a benign tax regime and expertise in manufacturing sectors such as automotive and aviation.
Wang makes clear his reasons for enthusiasm:
"Politically it's a relatively open environment for foreign investors. The UK government has done a reasonably good job promoting the infrastructure sector at national level, and at state level Scotland and Wales have been promoting themselves."
It's worth noting that the UK attracts more investment than other European countries. As Business Secretary Vince Cable was able to announce last week, over 110,000 jobs were created last year; a 20% increase on the previous year.
This bodes well and gives cause for optimism. However, the news that manufacturing across the world is in a slump - including the US, China and Germany - shows that the economic portents are still not rosy.
Concerns about the Eurozone will add to pessimism. City forecasting firm Fathom Consulting suggestion that a breakup would potentially cause a 5% contraction in UK GDP shows how precarious things are.
So, it seems, the Olympics provide a very useful 'backdrop' to economic development and using the Games to achieve this objective is entirely sensible.
As Colin Stanbridge from the the London Chamber of Commerce believes, we need to emulate the example of Australia one of the few countries to achieve growth after hosting an Olympic games:
"The next stage after the Games is to be able to go around the world and make sure that we ride the crest of the wave and get more business out of it. The Australians probably did this better than anybody else when it came to the Sydney Olympics [in 2000]. They are still riding on the back of those Olympics."
Believing that the London Olympics on their own will be a panacea for economic problems is mistaken.
As Professor Stefan Szymanski, a specialist in the economics of sport at the University of Michigan, believes, academic evidence shows "pretty conclusively" there are negligible economic benefits to hosting a major sporting event although it can be fantastic for a country's morale.
Given the increasingly phenomenal costs, it begs the question as to why any country bothers to host the Olympics. The reason, Szymanski explains, is that governments believe they will be "highly prestigious and hugely popular with the electorate."
Any economic spin-off should be seen as a bonus.
It is really good to be able to report on great news from Marketing Birmingham Regional Observatory.
Their statistics show that Birmingham and the Midlands is one of the most attractive places in the UK for foreign investment and that whilst investment in the UK fell by 2% last year, it increased here by 37%.
The result of this investment - mainly in manufacturing companies - has been the creation of 5700 jobs and the safeguarding of 5000 existing jobs.
As Wouter Schuitemaker from Business Birmingham believes, given the currently competitive market this is a "considerable achievement".
Apparently, what makes investment by the likes of the China, the US, India and, surprisingly, Germany, in this region is that it is recognised as having expertise and a great skills base in engineering.
As a nation we may not top the medals table at the end of the Olympics - China or the US currently seem assured of achieving that.
What we can remain confident about is our role in influencing the rest of the world through our unique ability to design and innovate and to create style and brands that are perceived to be admirable.
Last Friday's opening ceremony for the London Olympics was based upon the tremendous contribution that this country has made to, among other things, science, technology, literature and music.
The appearance of Tim Berners-Lee, the British-born inventor of the world-wide-web, at the ceremony underlined our ability to continue to contribute.
If nothing else, what the world will have witnessed, clichéd as it appears, is that 'Cool Britannia' still exists.