London bombs may scare tourists, hurt spending

London's tourist industry is likely to be hard hit by a series of bomb attacks on the capital, the latest of which hit the city's transport system on Thursday, a British tourist group said.

And businesses in central London also said they expected a drop-off in trade as worried shoppers head for out-of-town malls.

After the first wave of bombings on July 7, tourists organisations were optimistic of a quick recovery.

However, on Friday, tourism authority VisitBritain said it expected to lose £150 million of tourist spending in the capital this year as visitors stayed away.

The report, completed before the latest wave of bombings, said the loss of revenue to Britain would total at least £300 million, or a two per cent of the previous year's income.

Steven Dowd, chief executive of UKinbound, which represents over 300 companies involved in bringing visitors to Britain, said Thursday's attacks could raise the impact further.

"One attack followed by a recovery is one thing, a second attack - all bets are off," he said.

Tourists spend around £15 billion a year in the capital, which accounts for nearly a fifth of British economic output, according to the VisitLondon tourist board.

"Hotels, museums and theatres will probably take a hit," said Kenneth Broux, economist at Lloyds TSB.

London retailers, already smarting from a slowdown in domestic consumption, are also worried a drop in tourist number would hurt them.

"The attacks could deter people from visiting central London destinations," said Kate Ison, a spokeswoman for the British Retail Consortium, adding that the average tourist spends about £70 on a shopping trip to London.

The number of shoppers in London stores was just beginning to pick up after the deadly bomb attacks on July 7, when further bomb attempts on Thursday once again drove people away.

Retail metrics group SPSL said customer footfall - the number of shoppers - fell by 26.9 per cent after Thursday's bombings, after a decline of over 74 per cent reported on July 7.

"The most fundamental question we must now ask is whether shoppers will no longer consider the 7/7 attacks as a one-off event but as part of an ongoing threat. If they do, then it is likely that consumer recovery will be very much slower as a result," said SPSL director Tim Denison said.

The Bank of England is worried that a slowdown in consumer spending could hit economic growth, and four of its nine-member policy committee voted for a 25-basis point cut in interest rates in July, fuelling speculation a cut is imminent.

Economists said that while spending in shops accounted for a large chunk of London's economy, the net effect on retailers could be balanced out by increased spending in out-of-town shopping malls.

Other analysts noted that as the attacks came at the start of the school summer holidays many British families would be put off visiting the capital.

"We have to expect downturn and accept that a lot of Britons are not going to take day trips into the city centre," said Rod Taylor, hotels analyst at Barclays.