On 7 July 2005 the euphoria of London’s Olympian triumph over Paris was tragically cut short. The gloom that enveloped London has since been replaced by a steely defiance against terrorism. Such gallantry in the face of adversity is not, however, visible in the forecasts of the potential success of the London Olympics themselves. Worryingly, the case for the 2012 games being held in London has only faltered since the city was actually made host.

At first glance, hosting the Olympics should be a guaranteed money-spinner. The games will surely provide work for thousands, will regenerate the neglected Lea Valley area and will bring hundreds of thousands of visitors brimming with a feel-good factor that should inspire liberal consumer spending. That things are not so simple is most clearly demonstrated by a quick glance at the fortunes of past host cities.

The estimated cost of €1.75bn for the 2004 Athens games rose steadily, until it was recently revealed that the true figure was nearer €12.5bn. Montreal, host in 1976, is still paying off the massive debts that it accrued from organising the games. The London estimate of €7.2bn seems too conservative, while the call for just under €300 million for security is preposterous. At Athens, the first games held after 9/11, almost four times that figure was spent on security. This must surely constitute a bare minimum for the London games.

These spiralling costs will have an impact on business, despite the brunt of the burden being borne by the taxpayer. Olympic enthusiasm among the population is going to be extremely difficult to maintain over the next seven years of heavy costs. Hopes of high Olympic-related spending at any stage other than during the games themselves are probably misplaced.

As the construction industry contemplates the challenges set by the lofty promises made by the UK’s Olympic bid, it is hardly rubbing its hands at the prospect of an €11.5bn Olympic windfall. There is a serious danger of the commercial property market overheating, leading to inflation. Also, outside London there are concerns about the inevitable movement of jobs, skills, resources and contracts towards the capital as 2012 approaches.

The decision made by the International Olympic Committee was a vote of trust in London’s ability to be ready to host the Olympics in seven years. The infrastructure will surely be in place come 2012, but the cost of the operation looks set to far outweigh any benefits for UK business.