XX Commonwealth Games Visitor Study: Economic Impact Report

3. Gross Economic Impacts

Introduction

3.1 As specified by the study brief, the visitor economic impact of the Games has been assessed by analysing the effect of the spending by visitors in terms of its contribution to the economy (GVA)^[11] and employment at the Scottish, Glasgow and the Clyde Valley and the Glasgow levels using a process which adheres the eventIMPACTS toolkit of resources to help event organisers improve their evaluation of the impacts associated with staging cultural and sporting events^[12]. The impact on economic output^[13] is also reported throughout.

3.2 Before setting out the results some key concepts are explained.

3.3 Spending by all visitor groups increases demand for the goods and services purchased by visitors (e.g. in hotels, restaurants, shops). Businesses will increase staff numbers, or possibly hours, so as to increase output. These businesses will also increase their purchases from their own suppliers. Within the supplier businesses the same response to increased demand will take place.

3.4 Figure 3.1 illustrates this process.

• Where there is an increase in demand for a particular product, we can assume that there will be an increase in the output of that product, as producers react to meet the increased demand; this is the direct effect.
• As these producers increase their output, there will also be an increase in demand on their suppliers and so on down the supply chain; this is the indirect effect.
• As a consequence of the direct and indirect effects the level of household income throughout the economy will increase as a result of increased employment. A proportion of this increased income will be spent on goods and services: this is the induced effect.

3.5 The three effects combined are the total impact. The Scottish Government Input-Output Model enables us to quantify these multiplier effects and thus to measure the impact of increased spending on the Scottish economy.

Figure 3.1. Economic Impact Elements

3.6 The impacts of increased spending can be measured in three main ways (all of which are reported below). These are the impact on:

• Output (the value of the extra good and services produced)
• GVA (the net gain from production)
• Employment, expressed as full time equivalent (FTE)^[14] jobs in 2014.

The Economic Impact Assessment

3.7 The methodology set out above involves three initial stages:

• Identifying levels of expenditure
• Establishing the direct impact of that expenditure
• Establishing indirect and induced impacts
  (multiplier effects)

3.8 The sources of information on expenditure for the various visitor groups were detailed above. The analysis of expenditure by event visitors is fully reported in Visitor Survey Report^[15]. Relevant data were extracted from that analysis.

3.9 The process of translating expenditure by location into direct, indirect and induced impacts was carried out using the Scottish Government's Input Output Framework. The model is based on detailed input output tables which show the flows of goods and services between enterprises and, specifically, the inputs from other sectors of the economy needed by any given sector to produce its own outputs. This means that the effect of an increase in demand for any one sector's output on all other sectors of the economy can be traced and the impact of demand for any one sector's output on income (and on employment using the ratio of GVA to employment) in that sector calculated.

3.10 The Scottish Government Input Output Framework is able to measure impacts at three levels - Glasgow, the Clyde Valley (excluding Glasgow) and the rest of Scotland. This was done by distributing the direct impact according the location of the expenditure as determined by the analysis of the survey data undertaken by TNS and Optimal Economics and the Scotland wide indirect and induced effects between local authority areas in proportion to each area's share of Scottish employment in every economic sector.

Gross Economic Impacts

3.11 Table 3.1shows the gross impact of all event visitors spend at five geographical scales. The impact on GVA in 2014 at the Scottish level was £117.1 million and the employment effect is the equivalent of 3,385 full time equivalent (FTE) jobs for one year (in 2014).

Table 3.1. Games (Glasgow 2014 and Festival 2014) Gross Economic Impact - Event Visitor Spend

Area	Output Impact £ Million in 2014	GVA Impact £ million in 2014	Employment Impact (FTE in 2014)
Glasgow
Direct	103.4	50.8	1,777
Indirect	8.8	4.5	90
Induced	6.5	3.5	61
Total	118.7	58.8	1,928
Clyde Valley
Direct	6.5	3.2	120
Indirect	10.2	4.9	95
Induced	7.1	3.9	66
Total	23.8	12.0	281
Glasgow and Clyde Valley
Direct	109.9	54.0	1,897
Indirect	19.0	9.4	185
Induced	13.6	7.4	127
Total	142.5	70.8	2,209
Rest of Scotland
Direct	30.9	15.4	573
Indirect	36.9	16.7	351
Induced	27.1	14.2	252
Total	94.9	46.3	1,176
All Scotland
Direct	140.8	69.4	2,470
Indirect	55.9	26.1	536
Induced	40.7	21.6	379
Total	237.4	117.1	3,385

Source: Expenditure data from Games Visitor Survey. Scottish Government Input-Output Model 2011 v4.06.

Note: Due to rounding some figures may not sum to totals.

3.12 At the Glasgow and Clyde Valley level the gross impact of event visitor spend was 2,209 FTE jobs in 2014 and £70.8 million GVA in 2014.

3.13 At the Glasgow level the gross impact of event visitor spend was 1928 FTE jobs in 2014 and £58.8 million GVA in 2014.

3.14 Outwith Glasgow and the Clyde Valley, the gross impact of event visitor spend across the rest of Scotland was 1,176 FTE jobs in 2014 and £46.3 million GVA in 2014.

3.15 These impacts rise from the £176 million spending by event visitors. The combined gross spending of volunteers (including training) was estimated to be £5.6 million and that of media was estimated to be £4.1 million. Together this amounts to £9.7 million - almost all in Glasgow. This represents an additional spend equivalent to 5.5% of total event visitor spend, 7.6% at the Glasgow level and 7.1% at the Glasgow and Clyde Valley level.

3.16 We assume, on the basis of a comparison of the expenditure patterns of volunteers with that of event visitors and previous work on media spending impacts^[16], that this extra spending would have approximately the same impact as other visitor spending. The modelled impacts of events visitors spend have thus been grossed up accordingly^[17] to give the total impacts as show in Table 3.2.

Table 3.2shows the gross impact of all visitors group spend at five geographical scales. The impact on GVA in 2014 at the Scottish level was £123.5 million and the employment effect is the equivalent of 3,575 full time equivalent (FTE) jobs for one year (in 2014).

Table 3.2. Games Gross Economic Impact - All Visitor Group Spend

Area	Output Impact £ Million in 2014	GVA Impact £ million in 2014	Employment Impact (FTE in 2014)
Glasgow
Direct	111.3	54.7	1,912
Indirect	9.5	4.8	97
Induced	7.0	3.8	66
Total	127.8	63.3	2,075
Clyde Valley
Direct	6.5	3.2	120
Indirect	11.0	5.0	101
Induced	8.0	4.0	70
Total	25.5	12.2	291
Glasgow and Clyde Valley
Direct	117.8	57.9	2,032
Indirect	20.5	9.8	198
Induced	15.0	7.8	136
Total	153.3	75.5	2,366
Rest of Scotland
Direct	30.9	15.4	573
Indirect	38.9	17.6	370
Induced	28.6	15.0	266
Total	98.4	48.0	1,209
All Scotland
Direct	148.4	73.3	2,605
Indirect	58.4	27.4	568
Induced	43.6	22.8	402
Total	251.7	123.5	3,575

Source: Calculations by Optimal Economics.

Note: Due to rounding some figures may not sum to totals.

3.17 At the Glasgow and Clyde Valley level the gross impact of all visitor groups spend was 2,366 FTE jobs in 2014 and £75.5 million GVA in 2014.

3.18 At the Glasgow level the gross impact of all visitor groups spend was 2,075 FTE jobs in 2014 and £63.3 million GVA in 2014.

3.19 Outwith Glasgow and the Clyde Valley, the gross impact of all visitor groups spend across the rest of Scotland was 1,209 FTE jobs in 2014 and £48.0 million GVA in 2014.

3.20 Results corresponding to Table 3.2 for Glasgow 2014 alone, for Festival 2014 and for the Merchant City Festival are provided in Table C.1, Table C.2 and Table C.3 respectively in Annex C.