Cash-strapped Britain eyes Olympic business bounce

LONDON (Reuters) - British Prime Minister David Cameron will on Thursday use the London Olympics to drum up business opportunities on the first day of a series of trade and investment events he hopes will harness the Games to help drag Britain out of recession.

Dignitaries such as International Monetary Fund Managing Director Christine Lagarde and the heads of global firms such as Google's Executive Chairman Eric Schmidt are expected to attend the first of the business events later on Thursday.

Britain hopes to seal one billion pounds ($1.5 billion) of deals this summer as businesses capitalise on the Olympics, the first to be held in Britain since 1948.

"I believe the legacy of these Olympics can be about many more things as well as great sport - for instance, it can be about great business too," Cameron said in extracts of the speech he is expected to give at Thursday's event.

"Yes, I want medals for Britain. And there will be no more passionate supporter of Team GB than me. But I've got a job to do this summer. And a big part of that job is to get behind British business," he added.

Cameron is under pressure to turn around Britain's economic fortunes. On Wednesday, data showed the economy shrank far more than expected in the second quarter, battered by everything from an extra public holiday to the euro zone crisis.

The issue has become highly political, with growing calls for the government to ease its seven-year fiscal austerity programme, one of the toughest in the world.

Cameron will have welcomed support for his deficit-cutting drive from Angel Gurria, secretary general of the OECD, who warned on Thursday that the markets would come down on Britain "like a tonne of bricks" if they detected weakness.

"The UK adjustment programme cleared the markets. This is why you have very low borrowing costs. This is why I think you should just persevere. You are now sowing the seeds of what will be the elements for recovery," Gurria told BBC Radio 4.

"You have to have credible public finances before you start moving on the growth," he said.

The government is also keen to assuage critics of the Games who say the event is too expensive at a time of strained public finances, by highlighting the business opportunities offered by the event and uses of Olympic venues after the Games have ended.

"As we welcome the world's best athletes, we also welcome the world's best companies - so that they can succeed, invest, and create jobs," finance minister George Osborne said.

Britain reported on Thursday a gain of nearly 53,000 new jobs in the 2011-12 financial year from inward investment, an annual rise of 26 percent.

However, figures from the United Nations World Investment Report show that this year's $54 billion of foreign direct investment is only a fraction of the $196 billion recorded in 2007, before the global banking crisis.

Others expected to attend Thursday's conference include Bank of England Governor Mervyn King, Vodafone Chief Executive Vittorio Colao and GlaxoSmithKline Chief Executive Andrew Witty. A total of 17 days of business summits are planned.

"In the coming weeks, with major global investors in town for the Games, I am embarking on a gigantic schmooze-athon, to highlight this and the wealth of other amazing investment opportunities that exist," London Mayor Boris Johnson said.

(Additional reporting by Estelle Shirbon, editing by Ken Ferris/Greg Stutchbury)

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