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Benefits of Hosting the Olympic Games

To what extent is hosting the Olympic games socio economically beneficial to the host country,
comparing the London 2012 and Rio 2016 games?

Geography

May 2019

Word Count: 3850

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Introduction:
Conventional wisdom holds the view that undertaking the challenge to become an Olympic

Games host city reaps long term economic benefits. Hosting the games can potentially draw

large numbers of tourists and stimulate economic growth.

The impacts of the Olympic Games are measured in a number of ways. For many countries,

economic gains such as GDP growth and/or foreign investment in the host city indicate

‘success.’ However, it is also important to question whether exorbitant expenditure on hosting

the Games is the most effective and efficient use of resources to bolster economic gains. From

a social standpoint, impact can be measured by the sense of pride derived from hosting the

games or getting the chance to be ‘put on the global map’. Whether it be through tourism,

infrastructure, or trade, the Olympic Games increase the ‘visibility’ of a city on the global map.

Each Olympic Games also comes with a cost. There is the cost of planning, the cost of

infrastructure, costs of operation, implicit costs, explicit costs, and most importantly

opportunity costs. Ensuring a profitable cost-benefit equation is where most countries struggle.

This equation is further complicated by the stage of economic development of the host

country. Given this, the essay will compare and contrast the Rio 2016 games and the London

2012 games. While the former took place in Brazil, an emerging market economy, the latter

took place in England, a developed economy, thus providing us with the perfect platform to

evaluate the socio-economic benefits to the host country of the Olympic Games.

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Locational Context

Figure 1. Map to show Brazil and the United Kingdom on the world map.

Figure 2. Maps to show the location of Rio de Janeiro in Brazil, and London in the United Kingdom

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Figure 3. Map to show Rio’s 4 Olympic Zones

Figure 4. Simplified map to show East London, and the location of the Olympic Park.

Methodology:
Due to locational limitations, data for this essay is secondary, and has been taken from a variety

of sources, including published texts, articles, and databases.

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Table 1 provides both the Social and Economic goals for each of the host cities. This section of

the report will look at the similarities in both cities goals and identify 5 social and 4 economic

indicators through which their impact can be measured.

Social Indicators

Social impact, as defined by the European Communities, is ’ “The effect or consequence of an

event on human life, behavior and interactions between individuals such as better knowledge of

foreign languages, improvement on destination’s health, increase of the community’s life

expectancy and creation of new sporting facilities.’ (Konstantaki, 2008). The social indicators to

be chosen will strike a balance between the definition above, and the goals of each host city.

o Sc01: Opinion Polls

 Gauging public perception over time as to whether the Games were

beneficial to the host city. This indicator has been chosen as one of the

goals of both cities was to change public perception towards the hosting

of world-class sporting events.

o Sc02: Educational Level

 Along with Infrastructure and Healthcare, Educational Level provides an

indication of government investment in society, and goes hand-in-hand

with both cities goals to improve educational standards.

o Sc03: Crime Rates

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 Both cities aimed to reduce crime rates, primarily through gentrification.

This indicator will look at crime rates from the time of the bid, to the time

of the games.

o Sc04: Property Prices/Affordable Housing

 Both cities wanted to provide affordable, mass-market housing. This

indicator will look at property prices over time to see if investment in the

Olympic Games had any impact on affordable housing.

o Sc05: Health/Available Sporting Facilities

 Both cities looked to the Olympic Games to promote a more healthy

lifestyle. However due to the unavailability of longer term health metrics,

the study will look at the availability of sporting facilities before and after

the games.

Economic Indicators

Like the social indicators, these economic indicators have been chosen in accordance with the

economic goals of both London and Rio. Both cities focused on gentrifying underdeveloped areas

and bolstering the most important stated aspect of the economic goals, job creation.

o Ec01: Employment Indicators – Unemployment Rate

 The main economic goal of both cities was to reduce unemployment,

specifically in the gentrified areas. This indicator will look at

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unemployment over time and judge the impact of hosting the Olympic

Games.

o Ec02: Tourism

 One of Rio’s goals was to increase international tourism. This indicator will

look at the number of arrivals over time, as well as tourism spending.

o Ec03: Value Added by Economic Activity

 Hosting the Olympic Games requires contribution from various sectors of

the economy. This indicator will look at the contribution of each of the 6

key sectors of the economy, before and after the games.

o Ec04: Jobs Created in Olympic Activities

 This indicator has been chosen to help distinguish the general impact of

employment from the direct-Olympic impact on employment to evaluate

whether hosting the Olympic Games makes a difference to employment.

Although London and Rio will be analyzed separately, their overall impact will be evaluated

together, with the report listing key success factors and areas of learnings from both.

Data Analysis

Social Indicators

Sc01: Opinion Polls


Data Presentation

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Analysis

London

As shown by Figure 5, in 2005, there was a strong belief that hosting the Olympic Games would bring jobs to London,

promote London around the world, and regenerate East London. In 2013, a year after the games, the results were

mixed. While there was a strong belief that the games truly had regenerated East London, promoted London around

the world, and increased chances to get involved in sport, there was the concern that the Olympic Games had not

provided jobs and opportunities for Londoners. (University of East London, 2015)

Rio

Looking at Rio, Figure 6 suggests that there was a strong interest in the games, as well as the belief that the games

would promote Brazilian culture. 7 years on, Rio seems to have succeeded in bring in tourists and promoting Brazilian

culture (Welle (www.dw.com), n.d.), however like in London, the public perception was that it fell short in creating

jobs for Brazilians.

Impact

London & Rio

Despite failing to reach their targets in terms of job creation, public opinion in both cities showed satisfaction

towards hosting the games. The failure to create enough job opportunities by both cities can to some extent be

explained by the unstable economic environment which prevailed in both cities at the times of the games. (Powell,

2017)

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Sc02: Educational Level
Data Presentation

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Analysis

London

From 2005-2014, there has been a secular improvement in educational levels across the system, where both London

and the Host Boroughs have improved. This is illustrated by Figures 7 and 8. It is interesting that while London and the

Host Boroughs show equal improvement in Level 1 and Level 4/5, the Host Boroughs have clearly outperformed in ‘No

Qualifications’ and Level 2/3. (University of East London, 2015)

Rio

Figure 9 illustrates a general improvement in Rio across all educational levels over a 7-year period. (“A Primer on Public

Education in Rio de Janeiro | RioOnWatch,” n.d.) Whats interesting is that improvements in educational level decreased

as we move across age levels, with the largest improvement seen with children aged 0 to 3, and the least change in

students enrolled in higher education. (SAGE, 2017)

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Impact

London

The fact that educational levels in East London showed greater improvements than in Greater London is evidence of the

investment that took place in the former, also known as the ‘Olympic Effect.’ (“The Olympic Effect,” n.d.)

Rio

For Rio, the increase in educational levels was also positive, however the lack of comparative data makes it difficult to

ascertain whether improvements in Rio were part of an overall trend, or linked to the games, as in East London.

Furthermore, with so many of the promised post-games schools yet to be built, much of the positive effect may not yet

be discernible. (“Sustainability and the Olympics,” n.d.)

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Sc03: Crime Rates
Data Presentation

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Analysis

London

In the Host Boroughs the crime figures per 1,000 population were considerably higher than for London as a whole up

to 2008/09, after which period they fell consistently. (Rayner, 2012) In 2014, as per Table 3, the rate of crime in the

Host Boroughs now equaled the rest of London overall with major reductions in the rate of property crimes.

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Rio

For Rio, as shown by Figures 9, 10, and 11, crime rates fluctuated, however the overall trend showed an increase

across all levels of crime in the city. In fact, the homicide rate consistently increased over the 7-year period, compared

to the Robbery and Property crime rates which both temporarily declined in 2013. (“Charts,” n.d.)

Impact

London

The trends in crime for East London mimicked those in Greater London, suggesting that even without direct-Olympic

investment, crime rates would have decline naturally over time. However, it must also be acknowledged that hosting

the Olympic Games gives the government a greater incentive to spend on reducing crime rates, and perhaps that

explained the rapid decline in East London. (Helm & Doward, 2012)

Rio

In Rio, crime rates actually increased over the 7-year period. (Rapoza, n.d.) It may perhaps have been the sheer

magnitude of the issue of crime, or that funding from the Olympic Games wasn’t enough, but like in London, the

results show no correlation between hosting the Olympic Games and a direct decline in crime rates. (“Crime and the

Olympics - Daily chart,” 2016)

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Sc04: Affordable Housing – Property Prices
Data Presentation

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Analysis

London

Although one of the goals for London was to create more affordable housing units, Figure 12 shows that housing

prices in the 6 Host Boroughs from 2012-2016 increased almost twice as much as they did in Greater London. In

addition, to date, only 2,816 of the promised 9,000 affordable housing units have been constructed, with only an

additional 1,379 planned before the end of 2020. (University of East London, 2015)

Rio

Figure 13 shows that 3600 affordable apartments were created for the Olympic Games, however just 80 were sold.

(Davis, 2017) This was a consequence of the economic recession, and the subsequent property market crash where

buyers lost confidence in the market. (Romero, 2017)

Impact

London

The gentrification of East London increased the value of property in the area, and hence increased prices. This

actually goes against the idea of affordable housing and represents a complexity when trying to carry out

gentrification, but also create affordable housing. As stated by an article published in the Guardian, ‘London

Olympics has brought regeneration, but at a price locals can’t afford.’ (Bernstock, 2016)

Rio

“They overbuilt and they misbuilt,” said Andrew Zimbalist, an economist at Smith College. “They built high luxury

condos at a time when the market was about to go bust.” (ZIMBALIST, 2017) By the time of the games, Rio’s property

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market had already crashed, and is yet to recover. (“Brazil Real Estate Prices Down in August for 8th Consecutive

Month | The Rio Times,” 2018)

Sc05: Available Sports Facilities


Data Presentation

Analysis

London

The general trend in Table 4 was an increase in the number of sports facilities from 2008 to 2015. The largest

increase was in the number of sports halls and the number of swimming pools, even though there was a significant

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decrease in the number of grass pitches, from 588 to 351. (University of East London, 2015) Additionally, the public

also had access all of the facilities used for the Olympic Games, including a Tennis Centre, an Aquatics Centre, a

Hockey Centre, and a White-Water Centre. (London Assembly of Economic Development, 2012)

Rio

As recognized in Table 4, the number of facilities increased across the board. The largest percentage change was in

sports halls, which went from up by 760%; however, the largest unit increase was in courts, which increased by 786.

(SAGE, 2017) Of the Olympic facilities used for the Games, some were to be leased out to sports clubs, some were to

be taken down and used for other projects, and very few were to be made available for the public. (“2016 Olympic

Park Master Plan | Brazil | AECOM |,” 2011)

Impact

The use of conventional health statistics would not be suitable for this essay as it would be difficult to correlate long-

term improvements in health with short-term investment in the Olympic Games.

Even when looking at sports facilities, it’s difficult to compare between the Host Boroughs and Rio, as the former has

a population of 257,000, and the latter is at 6,320,000. Furthermore, with the 6 Host Boroughs, it is easier to identify

Olympic induced investment in sporting facilities (Gibson, 2012), whereas in Rio, it is difficult to distinguish direct-

Olympic investment with general government investment which would have occurred regardless.

However with the general trend showing an increase in sporting facilities, we can conclude that the Olympic Games

correlate with an increase in sporting facilities.

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Economic Indicators

Ec01: Employment Indicators (Unemployment Rate)


Data Presentation

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Analysis

London

As per Figure 16, the unemployment rate fluctuated from 2005 to 2014, peaking in 2009 and 2011, which coincided

with the economic recession. (“UK economy in double-dip recession - BBC News,” 2011) The unemployment rate in

both London and the UK decreased towards the 2012 Games, however the more significant decrease came in 2013,

a year after the games. (Inman & correspondent, 2013)

Rio

As shown by Figure 17, Rio’s unemployment rate continued to decline until 2014, which was the year of the World

Cup, and the year in which Brazil recorded its highest ever GDP. (“Brazil economy ends 2014 on an upbeat note,

boosting Rousseff,” 2014) However, after 2014, when Brazil entered an economic recession, the unemployment

rate soared, and continued to do so even after the games. (“Brazil’s Unemployment Crisis Is The Worst In 20 Years,”

2017)

Impact

London and Rio

In both cities, the rise and fall in unemployment cannot be attributed directly to an Olympic effect. Jobs created for

a two-week Olympic event may impact the unemployment rate within specific areas, however when looking at the

impact on an entire city, there just aren’t enough jobs created to make an impact. (Carpenter, 2015) Furthermore,

during a recession in which Brazil’s GDP dropped by over 600 Billion USD, 13.1 Billion spent on the Olympics, or

8000 temporary jobs created would have a very minimal impact overall. (Reuters, 2017)

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Ec02: Tourism
Data Presentation

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Analysis

London

As per Figure 18, international tourism peaked in 2007, but then fell sharply over the next two years as the UK

entered a recession. (Smithers, 2009) Only in 2010 did the numbers start to rise again and continued to rise even

after the games. As shown by Figure 20, tourism expenditure went hand in hand with the number of tourists, with

rises/falls occurring at the same time. (Thomas, 2013)

Rio

As illustrated by Figure 21, the number of tourists increased quite consistently until 2016, with a small decline in

2015, which was the year after the World Cup and before the Olympic Games. Tourism expenditure, as shown on

Figure 23, peaked in 2014, but failed to pick back up again by the time of the Olympic Games. (Deutsche Welle, 2017)

Impact

Figures 19 and 22 show the GDP’s of both nations from the time of the bid to the time of the games.

London

In London, it is interesting to note that the number of tourists and tourism expenditure was very similar to the GDP of

the country during the same time period. This illustrates not only the minor impact of the Olympic Games on such a

large economy, but also the large impact of the economic environment on tourists, and tourist spending. (Blake,

2014)

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Rio

Until 2014, the number of tourists as well as tourism spending was linked directly to the GDP. However, after 2014,

the number of arrivals continued to increase, whereas spending and the GDP fell into decline. This illustrates the

impact that the Olympic Games can have on smaller economies, and shows that whatever the economic situation,

the ‘Olympic Aura’ will still attract visitors. (Sauvestre, 2017)

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Ec03: Value Added by Economic Activity
Data Presentation

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Analysis

London

Figure 24 shows that over a 7 year period, the largest growth was experienced in the Construction and

Wholesale/Retail sectors of the economy (Westminster Business School, 2012), and the largest decline was

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experienced by the Manufacturing and Transport industries. The only sector of the economy which remained

unchanged over this period was Agriculture and Forestry, which contributed a mere 0.6% to the GDP. (University of

East London, 2015)

Rio

The two industries with the largest growth in terms of value added to GDP were Construction and

Wholesale/Hotels/Retail. (Nazario, 2014) As shown in Figure 25, the industry with the largest decline was

Manufacuring and Utilities. The Agriculture industry remained unchanged for the most part, as did the

Transport/Storage industry. (SAGE, 2017)

Impact

London and Rio

Both cities showed a similar trend in terms of changes in value added by different sectors of the economy. With both

cities, construction for the games was complemented with numerous other infrastructure projects. This was reflected

in the results that showed an increase in the size of the Construction industry, as well as in the size of the Retail and

Hospitality industry, because new hotels, restaurants, and other retail facilities were added to increase the cities’

capacities. (Burgo & Cromartie, n.d.)

However, none of the industries grew large enough to relieve dependency on primary commodities, which is oil in the

case of Brazil, and manufactured goods in the case of the UK. (Blackwell, 2017)

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Ec04: Jobs Created in Olympic Activities
Data Presentation

Analysis

London

20% of the Olympic site workforce was resident in the five London host boroughs and 12% of the workforce was

unemployed prior to commencing work on the Olympic site. The cumulative workforce of 16,837 for the period 2008-

2010 was set to rise significantly as the peak phase for employment on the Olympic site occurred between 2010 and

the end of 2011. (University of East London, 2015)

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Rio

Table 7 shows that the number of workers rose significantly for Rio from 2012 to 2016, with 6,000 employees overall

at the time of the games. To help with the coordination of the two-week event, Rio took in 70,000 volunteers from

both Brazil (Scult, 2017), and from the rest of the world.

Impact

London

The snapshot provides evidence of the Olympic Delivery Authority (ODA) achieving its targets in terms of job creation

and, specifically, the employment of local residents, including those who were previously unemployed. (Association,

2012) The main impact on employment was in the regional (city) and, particularly, at the sub-regional level of the

Olympic Host Boroughs.

Rio

Due to the financial crisis in Rio, the city relied heavily on volunteers to help coordinate the games. This however, did

not contribute to long-term employment. (Blackwell, 2017) Furthermore, of the 6,000 people who were employed at

the time of the games, many were left without jobs once the games ended. Thus, although data on long term

Olympic-induced employment is unavailable for both cities, it is evident that the jobs created are temporary, and do

not have lasting effects. (Ludacer, 2018)

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Discussion and Evaluation:
To what extent is hosting the Olympic games socio-economically beneficial to the host country,
comparing London 2012 and Rio 2016?

This essay compared two contrasting cities. London, a developed city, and Rio, an

underdeveloped but emerging city. Each city put itself forward during times of economic

success to host the world’s largest sporting event, the Olympic Games. However, as

investigated in this essay, sustaining the economic success over the seven years it takes to plan

such an event can be difficult.

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Table 8, shown above, is a revised version of Table 1 shown in the introduction. The goals in

bolded text are ones that each host city was successful in achieving, and the ones in plain are

those that either the city failed to achieve or is yet to achieve under a revised timeline.

For the most part, London was successful in achieving its target social and economic goals.

Crime rates reduced significantly, educational levels increased, and public perception towards

the hosting of the games was positive, with a strong belief that the Olympic Games had

regenerated East London. (Tudor, 2015) Although London’s economic goals were quite vague,

with no specific targets set for unemployment, research showed that London had in fact

increased employment rates in both the Host Boroughs, and throughout the rest of the city.

However, there were also aspects where it fell short. According to an article published in

Reuters, ‘Five years on from the opening ceremony, promises to deliver “homes for all” and

narrow the gulf in living standards between the host area and the rest of London have not been

met, said residents, academics and some local leaders.’ (Reuters, 2017)

Rio, on the other hand, had a mix of successes and failures. Like London, it was successful in

making education more accessible, and developing Olympic-level facilities for the general

public; however, it ultimately fell short in achieving its more significant goals. Firstly, it failed to

provide affordable housing for the general public at a time when it was much needed.

(Eisenhammer, 2016) It also failed to lower the crime rate, with the Games being dubbed as

‘mad, bad, and dangerous.’ (Hayward, 2015) Finally, despite one of its biggest targets being

employment, it created little more than temporary jobs that lasted only as long as the games

did.

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My methodology was effective in that it laid out a strong model with which to approach the

topic. Key indicators were identified and then analyzed in order to appropriately answer the

research question. However, there were some limitations both in the availability of data, as well

as in the methodology. For a number of indicators, consistent data over 7 years was not

available for both countries, which means that they couldn’t be chosen for the essay.

Furthermore, the vagueness of both cities’ goals meant that it became difficult with the data

available to judge whether or not they had met them. There were questions I wanted to ask in

this essay about political involvement in the games, corruption, etc, however the narrow scope

limited me from doing so. Were I to make a few changes, I would broaden the scope of the

essay to perhaps accommodate a deeper analysis, and I would choose two Olympic Games

which occurred less recently in order to have access to more complete data.

Throughout my investigation, I realized that one of the key factors that contributed to the

success of the games was the role the games played in the city’s overall development plan. In

London, the Olympic Games were just a small part of a larger development plan where most

the facilities, barring the stadium and some of the other venues, were already being built within

the next 15 years. The Olympic Games only accelerated this timeline. (University of East

London, 2015) For Rio however, the Olympics, as well as the World Cup 2 years prior, were the

backbone of the city’s development plan. With so much to accomplish under such a strict

timeline, Rio wasn’t prepared for cost overruns, delays, and most of all, political unrest.

(Jenkins, 2016)

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I also realized that in the scheme of things, the impact of hosting an Olympic Event is minimal.

For London, the 9.3 Billion pound expenditure on the games was next to nothing when

considering that the country had an annual GDP of 2.6 Trillion Dollars. For Rio, the media

uproar of seven billion dollars overspent in the games was exaggerated given the near 600-

Billion-dollar loss in Brazil’s GDP from 2015 to 2016. (Rapoza, 2017) The media often overstates

the impact of the Olympic Games, and while the ‘Olympic Aura’ can certainly grab the world’s

attention, it’s now becoming increasingly clear that the Olympic Games can no longer rebuild a

city. They can ‘furnish’ it, but they cannot be the solution to a recession, or to inequality.

Although Rio learnt this the hard way, London was a good example of how the Olympic Games

can be socio-economically beneficial to the host country.

Appendix
Sc03: Crime Rate Tables

No Qualifications Level 1 Level 2/3 Level 4/5

All (Male and Female All (Male and Female All (Male and Female All (Male and Female
Combined Average) Combined Average) Combined Average) Combined Average)

2005 14.09% 10.43% 26.39% 34.15%

2006 13.63% 9.73% 25.96% 35.52%

2007 12.81% 9.54% 25.75% 37.68%

2008 12.01% 9.92% 25.23% 38.81%

2009 11.75% 9.44% 24.88% 40.08%

2010 9.96% 9.08% 25.43% 42.22%

2011 9.25% 9.80% 25.48% 46.26%

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2011 8.65% 8.54% 27.70% 47.34%

2013 7.94% 8.69% 26.88% 48.74%

2014 7.80% 7.82% 27.23% 49.48%

Sc02: Educational Level (London)

No Qualifications Level 1 Level 2/3 Level 4/5

All (Male and Female All (Male and Female All (Male and Female All (Male and Female
Combined Average) Combined Average) Combined Average) Combined Average)

2005 21.23% 10.46% 24.46% 26.06%

2006 19.44% 10.44% 24.48% 28.68%

2007 19.42% 11.06% 23.91% 30.75%

2008 18.59% 9.35% 24.03% 34.27%

2009 17.10% 9.64% 23.39% 32.66%

2010 14.53% 9.81% 24.58% 34.90%

2011 12.71% 10.65% 24.56% 41.48%

2011 12.29% 8.75% 26.66% 42.17%

2013 11.49% 8.92% 26.34% 42.40%

2014 11.46% 7.96% 29.44% 41.58%

Ec01: Employment Indicators (Unemployment Rate)

Country: UK

Unemployment Rate (All)

Date Unemployed Economically Active Percent

Jan 2005 – Dec 2005 1,464,900 29,570,500 4.95%

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Jan 2006 – Dec 2006 1,623,500 29,965,000 5.42%

Jan 2007 – Dec 2007 1,579,700 30,207,500 5.23%

Jan 2008 – Dec 2008 1,757,400 30,493,100 5.76%

Jan 2009 – Dec 2009 2,378,400 30,637,600 7.76%

Jan 2010 – Dec 2010 2,380,600 30,626,500 7.77%

Jan 2011 – Dec 2011 2,515,500 30,839,800 8.16%

Jan 2012 – Dec 2012 2,495,900 31,031,400 8.04%

Jan 2013 – Dec 2013 2,404,400 31,255,300 7.69%

Jan 2014 – Dec 2014 2,002,800 31,355,000 6.39%

Region: London

Unemployment Rate (All)

Date Unemployed Economically Active Percent

Jan 2005 – Dec 2005 274,800 3,751,200 7.33%

Jan 2006 – Dec 2006 296,700 3,825,100 7.76%

Jan 2007 – Dec 2007 270,200 3,878,600 6.97%

Jan 2008 – Dec 2008 283,600 3,983,000 7.12%

Jan 2009 – Dec 2009 378,900 4,074,500 9.30%

Jan 2010 – Dec 2010 369,000 4,088,200 9.03%

Jan 2011 – Dec 2011 401,800 4,189,800 9.59%

Jan 2012 – Dec 2012 400,000 4,267,000 9.37%

Jan 2013 – Dec 2013 390,600 4,362,600 8.95%

Jan 2014 – Dec 2014 316,000 4,429,900 7.15%

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