As bombs ripped through three Tube trains and a bus on Thursday, killing scores of people, the markets tumbled. At one point the FTSE 100 was down over 200 points, but it rallied to close just 71.3 lower on the day. The iconic index rose 73.9 on Friday, putting us back in positive territory, and it would have been more but for Diageo's profit warning.
Cynicism or pragmatism or the Blitz spirit, showing the British cannot be cowed by terrorists? Well, it wasn't really any of those. It was, though, an indication of the strength in depth of the UK economy - and the way in which the world has become so used to terrorism that it has a well-worn mechanism for washing the economic effects out of its hair.
It took New York an estimated 18 months to regain financial equilibrium after the 11 September attacks - which were, let's face it, many times worse than Thursday's bombings. The US economy was already on the slide because of the end of the dot-com boom, and would be rocked more by the Enron and the WorldCom scandals than by the actions of al-Qa'ida. Yet by 2004, the US consumer had put the economy back on track and even $60-a-barrel oil - putting petrol near the unheard-of $3-a-US gallon level - combined with a massive bill for the Iraq war has not blown it off course.
In Spain, the economic backwash from the Madrid bombings was barely noticed. This may be because the country, like the UK, is unfortunately inured to the effects of terrorist action - due to the decades-long campaign by Basque separatists Eta. But it was also because the direct costs of the bombings - in infrastructure rebuilding, compensation for victims and loss of earnings from those who died - can be overcome if workers, shoppers and tourists return to their normal routine in fairly short order.
In London, the evidence that workers will shrug off this attack, at least outwardly, is already there to be seen. Sure the roads, Tubes and buses were quiet on Friday, but that was because the disruption on Thursday encouraged many companies to let people work from home. And work they did. Few saw terrorism as an excuse to skive. Those who had to take the day off did so because two London boroughs closed their schools on Friday.
Tourists are a big factor in London. It welcomed 13.5 million last year, out of 28 million who came to the UK for their holidays. Of these, 70 per cent are from continental Europe. It is predicted that hardly any of them will be put off travelling to London.
Of the rest, just over half are from the US, where the short-term advice is not to travel to central London, though that will soon change. US tourist numbers will be down for some time, though looking at past patterns in Madrid, Istanbul and Bali (there is a depressing track record), the levels will be back to normal within a year.
Most of the slack will be taken up by the growing number of tourists from Asia, where changes in visa restrictions are bringing in thousands of newly affluent Chinese to the UK. The great thing about the Chinese is that they love branded goods and love to shop. And don't the shops need them.
Central London's stores have been hit by the congestion charge (which went up from £5 to £8 last week), the economic slowdown and now terrorism. Although consumption in general should not be hit by Thursday's events, it will make the choice between a trip to Bluewater and a schlep down Oxford Street a no-brainer.
Overall, economists are factoring no change in the UK's prospects as a result of Thursday. If anything, it should be positive, as it will copper-bottom next month's decision to cut interest rates and lead to the cost of borrowing coming down faster than it might have otherwise.
In the economic war, al-Qa'ida lost.Reuse content