Lowering the flame

LONDON — The Summer Games in Beijing wrapped up two months ago, but Britain is still drunk on the heady wine of victory. Thousands of people lined the streets here this week for a boisterous parade honoring the nation's Olympians, whose surprising haul of gold medals provided extra reason -- if one were needed in this pub-strewn country -- to party.

The hangover might lie around the corner.

London is set to host the Olympics in 2012, but the global financial crisis has left organizers looking for ways to scrimp amid a worldwide credit crunch, tumbling domestic property values and rising unemployment.

Already, the size of the athletes' village has had to be pared down. Plans to erect temporary sporting venues might be scrapped. And the government could be forced to hollow out its contingency fund of $3.9 billion, out of a total Olympic budget of $16.5 billion, if some of the private financing fails to come through.

"When the budget was agreed [to] two to three years ago, we certainly did not expect a financial meltdown in the world," said Keith Mills, deputy chairman of London 2012.

Olympic projects that were to be funded by a combination of public and private funds "are all constantly being reviewed," he said, adding, "We're in a very volatile market."

Two of the biggest projects, the Olympic village and a mammoth $700-million media center, are now under scrutiny because of potential funding difficulties. Officials have had to cut the number of housing units in the village from about 4,000 to about 3,000, meaning that each apartment will have to hold five athletes instead of four.

Londoners never expected their Games to match Beijing's extravaganza, which cost more than $40 billion. But neither did anyone expect grim reminders of the last time their city was the Olympic host, in the summer of 1948, when Britain was still staggering from wartime losses and the bombed-out capital was in such ration-coupon straits that the Games were dubbed the "Austerity Olympics."

Now the sudden crash of Britain's economy has chastened investors and officials and left them humbler about what to expect from their Summer Games.

Londoners who were used to cash and credit flowing as freely as champagne in recent years have had to rediscover a more traditional British value: thrift.

"The credit crunch is hitting the Olympics hard, but we remain resilient," John Armitt, chairman of the Olympic Delivery Authority, told London's legislative assembly this month.