London Calling – Help


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In our recent research we have talked about demand risk in Europe for the Industrials space in general and for the Chemicals sector in more detail.   This is not a new subject and it is discussed in the media every day.  I thought that I would pass on some additional thoughts that follow on from commentary by Nouriel Roubini yesterday.   Roubini is predicting economic trouble in London due to the Olympics.   Based on a couple of days in the city last week, I would have to agree.  London is deserted.

I was in London on July 31st and August 1st and I have never seen the city so empty (I am British and lived in London from 1980 to 1992, and have visited regularly ever since).

  • Walking past St Paul’s Cathedral on July 31st at around 9.00pm I saw a total of 8 other people, where you would expect to see 50-100.
  • The photo below was taken a few minutes later – it is Covent Garden – usually packed and vibrant: on the 31st it was deserted.
  • While in the UK, I heard plenty of reports of empty restaurants and under-occupied hotels.
  • Traffic in the city was light, the underground was tolerable, taxis were available everywhere and at any time – when I arrived at Waterloo station on the afternoon of the 31st there was no-one waiting for a taxi and plenty were available.
  • When I returned to the US on August 2nd, more than half the seats on my flight were unoccupied at check in.

The simple conclusion is that you are either in London for the Olympics or you are not in London at all.


Covent Garden, London, July 31st 9.00pm.

Due to fear of overcrowding, congestion, delays and other inconveniences, foreign tourists have stayed away and the Brits have also stayed away.  The weeks before the Olympics saw some commuting horror stories on the roads and at airports and this helped to convince non-games goers to stay away.  The consequence is lost revenue in London, and possibly lots of it.

We would expect spending in the UK to drop post the Olympics anyway, and while the London Olympics is not as large a piece of the UK economy as the Barcelona Olympics were for Spain in 1992, it is interesting to look at Spain’s GDP growth pre and post Q2 1992 – see chart.


The euphoria of the games for the UK (and by the way aren’t Team GB doing well?) may be followed by some very weak consumer spending and economic activity following a weaker than expected tourist season.

Twenty nine percent of exports from the US to the UK are in the Industrials and Basic Materials sectors – around $16 billion in 2011.  The UK was 3.8% of US export demand in 2011.

See our research for analysis of sector exposures to Europe.

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