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Property slump could hamper Olympic spending plans in London

A report published by the London assembly's budget committee is warning that the economic downturn and uncertainty over central government funding could put Mayor Boris Johnson's plans at risk.

The mayor's plans to use money raised by selling off the Olympic site to pay back the cash it has borrowed to help fund the games is predicted to be hampered by the property market slump in London.

'There is enormous pressure on the functional bodies. Many of their plans are facing delays and risks. The uncertainty surrounding preparations for the Olympics is of particular concern as the games are only three years away now,' said John Biggs, the chair of the assembly's budget and performance committee.

The report is published at the same time as the Government has revealed that the cost of the flagship Olympic stadium has risen by £22 million in the last six months to £527 million. The cost of the Aquatic Centre has increased by £5 million to £251 million and the velodrome has risen by £25 million to £446 million.

The figures are revealed in the annual report from the Department of Culture, Media and Sport.

The organisers claim, however, that overall cost rises of £196 million in the last six months will be offset by £193 million of savings which have been identified over the same period.

In Vancouver, construction of the village for the 2010 Winter Games is also dogged by financial worries. The development is bogged down in cost overruns, and the city has taken over the financing after the project's cash-strapped hedge-fund lender cut off payments. Now Vancouver is expected to have to borrow hundreds of millions of dollars to complete the project as promised by November.

Elsewhere cities putting together bids for the 2016 games are also facing concerns about how the global economic downturn will affect their bids. In Chicago there is row about the site where the Olympic stadium would be built, claims that tax payers will face huge bills and even some calling for the bid to be withdrawn.