Financial Crisis Dampens London’s Olympic Plans

Organizers of the 2012 Summer Games are looking for ways to scrimp amid the worldwide credit crunch, tumbling domestic property values and rising unemployment.

The Summer Games in Beijing wrapped up two months ago, but Britain is still drunk on the heady wine of victory. Thousands of people lined the streets here this week for a boisterous parade honoring the nation’s Olympians, whose surprising haul of gold medals provided extra reason — if one were needed in this pub-strewn country — to party.

London is set to host the Olympics in 2012, but the global financial crisis has left organizers looking for ways to scrimp amid a worldwide credit crunch, tumbling domestic property values and rising unemployment.

Already, the size of the athletes’ village has had to be pared down. Plans to erect temporary sporting venues might be scrapped. And the government could be forced to hollow out its contingency fund of $3.9 billion, out of a total Olympic budget of $16.5 billion, if some of the private financing fails to come through.

Credit Crunch Forces London Olympic Bosses to Recalculate

London’s Olympic chiefs are having to rework their budgets as the global credit crunch squeezes private funding for the 2012 Games — although Team GB’s success in Beijing has helped boost the coffers.

The government expects about seven billion pounds of private sector money to go into the Olympics and the regeneration of the area around Stratford in east London.

But fears are growing that, as banks worldwide stop lending, developers are struggling to come up with the cash, and taxpayers will have to step in.

The one-billion-pound Olympic Village, which will provide accommodation for 17,000 athletes, is proving the biggest headache as Australia’s Lend Lease, the preferred developer for the project, reportedly struggles to find the money.

A government study published in July warned the deal with Lend Lease — which had hoped to recoup some of its investment by selling on some of the accommodation after the Games — was “significantly affected by the downturn in the financial and property markets since the turn of the year”.