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Games to breathe life into London economy
(Agencies)
Updated: 2005-07-07 09:49

LONDON, July 6 (Reuters) - Hosting the world's biggest sporting event in 2012 for the first time in more than 60 years will be a Herculean effort for the British capital but experts say the economic benefits could far outweigh the costs.

Infamous for its creaking infrastructure, London was once written off as an unlikely candidate but emerged on Wednesday the winner over Paris, New York, Madrid and Moscow in the closest race in many years.

Transport improvements that are essential to host the whole world, along with a commitment to redevelop the poor Lower Lea Valley of East London, may have helped clinch the games.

"This will pay dividends for all of us," said Prime Minister Tony Blair. "To have the Olympic games in 2012 is going to be a huge thing for the country -- and for London it will be tremendous because it will regenerate the whole of that part of the East End of London."

The Mayor and the Government have agreed a public funding package of up to 2.375 billion pounds ($4.16 billion) to cover everything from new facilities to Olympic transport.

Part of that would come from up to 1.5 billion pounds worth of lottery receipts. Increases in council taxes that would cost the average household about 20 pounds a year would also help fund the games.

But such huge projects tend to go over-budget. Last year's Olympics in Athens cost nearly nine billion euros, almost double the amount forecast a year before the opening ceremony began.

PLENTY OF BENEFITS

The economic benefits, say the London Development Agency, are far-reaching, including a legacy of 9,000 new homes in the Olympics area with the construction projects alone creating some 70,000 jobs in the next 15 years.

Experian, the forecasting group, said the games could boost UK construction by more than 8.6 billion pounds, although they said this figure includes development projects that would have gone ahead anyway like the East London tube line.
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