London businesses after July attacks slower than ever

A recently conducted survey of London businesses found that the July bombings pushed confidence in the economy to its lowest point since the start of the Iraq war.

A retail industry group also reinforced earlier reports of a big drop in shop sales in London as businesses continue to count the costs of the two sets of attacks on the city's transport network.

A study for Lloyds TSB Financial Markets, carried out a week after the July 7 attacks by four suicide bombers who killed 52 commuters, found that faith in Britain's economic future fell to its lowest point since March 2003.

In a separate report, the London Retail Consortium said that shop sales in central London fell 8.9 percent in July on an annual basis -the worst drop since its records began in October 2002. The fall followed a 3.6 percent increase in sales in June 2005. Sales across the country recorded a smaller decline in July of 1.9 percent.

The consortium said that sales in the capital recovered a little after the deadly attacks on July 7 and the failed attacks on July 21 but they continued to be depressed by disruption on London's Underground railway, numerous security alerts and consumer anxiety.

Kevin Hawkins, Director of the consortium, said that the downturn in sales was particularly worrying given the spell of good weather in mid-July and the fact that June sales continued well into July - both factors that were expected to trim some of the fall.

"Taking these factors into account, the decline in sales is very serious, compounded by the 60 percent increase in the congestion charge which retailers need like a hole in the head," he said, referring to Transport for London's decision last month to raise the tax on private vehicles traveling into the city to eight pounds (US$14.48; Ђ11.68) from five pounds (US$9.05; Ђ7.30).

"The question now is whether some consumers will continue to stay away from central London and whether tourists will be deterred by the threat of further disruption," Hawkins added.

The Lloyds TSB report, conducted by Continental Research, said 40 percent of businesses across the country were pessimistic about the outlook for the British economy for the next three months, compared with 26 percent in June. Property firms, hotels and catering firms showed the steepest drop in confidence, the report said.

The survey also found that the amount of firms expecting their own business prospects to pick up fell to 42 percent in July from 55 percent in June.

Monday's report backed findings from the Confederation of British Industry last week that confidence among businesses fell for the first time in three years.

The CBI said that around 18,000 manufacturing jobs were cut in the three months to July, blaming an economic slowdown, the AP reports.