Confidence plunges in terror fallout

BUSINESS confidence in London has plunged as the full financial impact of the terrorist attacks on America makes itself felt. The mood in the capital is now even gloomier than it was in late September.

Within the past fortnight, almost 300 executives across London have been questioned by the Evening Standard and the London Chamber of Commerce and Industry. These are the key findings:

MORE than one in three businesses say turnover is down on pre-September levels. The same proportion expect sales to stay depressed over the next few months.

CENTRAL London has been hit harder than the suburbs.

RETAILERS have suffered hardest although manufacturers who thought they had escaped unscathed had a tough October.

One in 10 executives has cancelled or postponed a business trip to America.

THERE has been a sharp jump in the number of businesses expecting to lay off staff and cut marketing budgets.

ONE in four executives is optimistic about London's prospects compared with two in three in June.

Our latest Business Monitor dashes hopes that the post-11 September slump would be a short-lived blip. A month ago, 29% were optimistic about London's economic prospects. This month, the figure has slipped further to 25%. The proportion optimistic about their own company has also fallen to 41%, from 47% in late September and 72% in August.

Retailers are especially pessimistic. As many as 72% say that sales fell immediately after the attack. Some 57% say sales are still below pre-September levels and 54% fear sales will stay low 'over the next few months'.

Other businesses have not been hit as badly, but pessimists outnumber the optimists. Manufacturers seem to have suffered the least although their optimism may be fragile. Only 24% said turnover fell immediately after 11 September but 33% reported October sales below pre-September levels. This is the one business where more companies had a worse October.

It is also clear central London has been hit hard. City and West End companies are more likely than businesses in the suburbs to report a slump in sales and are more pessimistic. Almost half expect turnover to remain below pre-September levels for some time but only one in four suburban businesses share this view.

We also asked how the terrorist attacks had affected executives directly. Some 36% say they have experienced delays at airports because of security checks while 10% have cancelled or postponed business flights to America - a figure which reflects a huge loss of revenue to airlines.

Some 17% have postponed future holiday plans which explains why tour operators are having such a grim autumn. Only 5% say they have cut back on social visits to London though. It is more likely restaurants and theatres have been hit more by the sharp reduction in tourists.

However, this may change if London's economy continues to suffer. Until summer, Business Monitor found more companies expected to expand their staff than contract. The outlook has now changed. In July, 7% expected to shed workers. Now that number is 27%.