The impact of the London bombings on transport, high street spending and extra security costs will wipe about £2bn off the UK economy this year, a study shows today.
The Centre for Economics and Business Research (CEBR) said the impact, less than the cost of the outbreak of foot-and-mouth disease four years ago, would be felt mainly by big business in the capital. But anecdotal evidence points to a rebound in shopping and entertainment in London after a sharp plunge in activity immediately after the bombs.
Douglas McWilliams, managing director of the CEBR, said the impact of the outrage would probably slice 0.2 percentage points off economic growth this year. The CEBR said the disruption to the Tube would probably cut London's economy by 0.5 percentage points, equivalent to 0.1 per cent for the country as a whole.
"Possibly the bigger [impact] is a knock-on effect on consumer spending both in London and the rest of the UK," he said. "This is entirely psychological but some people may feel that conspicuous consumption is not appropriate at a time of national tragedy."
SPSL, a retail analysis firm, said shopper numbers were 77 per cent down on 7 July compared with the previous Thursday and 74 per cent lower than the same day a year ago. John Lewis, the department store group, said sales on the Friday were down 15 per cent on the year, and 20 per cent on the Saturday. But FootFall, another analysts' firm, said the number of shoppers in central London last weekend was up by 20 per cent on the previous week.
David Smyth, its director of business planning, said: "This has confirmed how determined the British public are to make a statement and continue with their everyday lives."
Urbium, a leisure company that owns 25 bars in the capital including its flagship Tiger Tiger outlets, said it was encouraged by the recovery after Thursday. "London is remarkably resilient and Londoners are too," said John Conlan, the company's chairman who has spent 30 years in the leisure industry in the capital. He said the company had managed to get enough staff in on Friday to open all its venues although business was quieter in the days after the attack. "What we have seen this week is encouraging, especially the numbers of people who were back on the street," he said. He said it would take two to three weeks to know whether trade had returned to normal.
"We have been in the West End for a number of years in leisure and we have been through 9/11 and the IRA's long campaign so we see what tends to happen," he added. "It is getting back to normal. We have to take it on the chin."
Shares in retailers and leisure companies fell sharply last Thursday but have recovered. There is evidence that spending moved to other venues or to the internet: John Lewis's online sales have surged 77 per cent in the past week. That pattern was seen after both 9/11 and bombings in Madrid in 2004.Reuse content