When the news of the attempted bombings in London broke last Thursday lunchtime, the City had other things on its mind. Economists and traders had spent the morning digesting the news of a surprisingly strong set of retail-sales figures and China’s long-awaited currency revaluation.

The pattern of previous terrorist attacks in New York, Madrid and the July 7 one in London all carried out during the morning rush hour, offered no hints.

As the rumours spread around London’s restaurants and dealing rooms, the markets and the pound initially took a hit, as they had a fortnight earlier. Firms put into action contingency plans, contacting key personnel and making arrangements to close down early if necessary.

When the news emerged that the bombing attempts had failed, the sense of relief was palpable. But so was the sense that something significant had changed. For businesses, the fear had always been that the July 7 attacks would not be an isolated event but the start of a sustained campaign. Now that fear appeared fully justified.

“We were very optimistic at first that the effects could be contained, but this changes things,” said Dan Bridgett of the London Chamber of Commerce (LCC). “Nobody would deny that there is going to be a temporary hit in terms of tourism and retail; half of London was closed down again on Thursday.”

Michael Cassidy, the LCC president, called for measures to tighten security in the capital, including the installation of scanners to inspect passengers on a random basis, greater use by the police of “stop and search” and more use by businesses of the pager system employed by the police and the Corporation of London, in order to pass information to key personnel in the event of further attacks. Mobile-phone networks were overwhelmed on July 7, and there were sporadic difficulties last Thursday.

In a statement issued with the Asian Business Association, Cassidy also said that prominent businesses and other high-profile targets should rethink their own security arrangements by, for example, relocating security checks to outside their buildings and away from reception areas, as in other cities.

Security is being stepped up in other ways. At The Wolseley on Piccadilly, one of London’s most fashionable restaurants, diners are required to keep their bags with them, rather than check them in.

The fear that Thursday was just the second — albeit unsuccessful — strike, in a prolonged bombing campaign has raised the economic stakes. According to Angus McCrone, senior economist at the Centre for Economics and Business Research, the London attacks have hit the economy when it is already “out of breath”.

Figures on Friday showed economic growth of just 1.7% compared with a year earlier, the weakest since 1993 and barely half Gordon Brown’s 3%-3.5% forecast.

“The signs are not very good for the third quarter, either,” he said. “Consumer spending, and to a lesser extent business confidence, is certain to be hit by the bombings in London.”

On London’s Tottenham Court Road, just a short walk from Thursday’s attempted bombing at the Warren Street Tube station, consumer and business confidence has certainly been badly affected this weekend.

The thoroughfare’s electronics stores, famous for their competitive prices, saw their trade hit by the July 7 attacks, and it was hit again last week.

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