Riots Hit UK Economy, from Corner Shops to Tourism

Four days of riots have already cost businesses and insurers hundreds of millions of dollars.

Posted: 08/10/2011 03:36 PM EDT
Filed Under Crime

People walk past damaged stores in Ealing, west London, after a night of rioting. (Photo: AP Photo/Lefteris Pitarakis)

LONDON (AP) — Stores smashed and looted by rampaging mobs, buildings in flames — the damage was to London and other English cities, but the images were beamed around the world.

 

Four days of riots have already cost businesses and insurers hundreds of millions of dollars. The cost to Britain's reputation — and its lucrative tourist trade in the runup to the 2012 Olympic Games — may be incalculable.

 

London's historic center, visited by millions of tourists a year, has been almost untouched by the riots which hit a handful of inner-city and suburban areas. That hasn't stopped images of flaming buildings and shattered shops under headlines like "London's burning" flashing around the globe.

 

"People read that there are riots in London, they think people are rioting on Tower Bridge or in front of Parliament," said Tom Rees, senior travel and tourism analyst at market research firm Mintel.

 

"The impression people are getting in other countries is that a lawless state existed in London for a few days," he added. "The impression could be fostered that it's just not safe, and that's a tremendous problem for tourism."

 

So far there is little hard data, but Rees said there are anecdotal reports about people canceling trips to London.

 

"I think there is certainly going to be a damaging short-term impact on arrivals," he said.

 

Patricia Yates of Visit Britain said tourism businesses had seen "concern from some consumers" but not yet cancelations.

 

Most tourist attractions have been unaffected by the rioting. Museums, art galleries, and West End theaters have remained open — though several smaller theaters in riot-hit London neighborhoods canceled performances on Tuesday.

 

The sports industry has been hit, with a soccer match scheduled for Wednesday between England and the Netherlands at London's Wembley stadium canceled to free up police officers for riot duty. Britain's soccer authorities said they were in talks with police to see whether this weekend's season-opening matches of the Premier League could still go ahead in London.

 

Tom Jenkins, chief executive of the European Tour Operators Association, said the images of riots looked bad, but the disturbances would have little long-term impact on Britain's resilient tourism industry.

 

"My members move tens of thousands of visitors in London every day and I haven't had any reports of anyone being caught up in it," he said.

"We've had major terrorist bombings, we've had sustained IRA campaign, we've had riots before. London is one of the most vibrant and safest places a tourist could go to. And that remains the case."

 

Aside from the impact on tourism, the riots have hurt a huge range of British businesses, big and small.

 

The looters' targets ranged from corner stores, stripped of booze, cigarettes and candy, to chains selling youth-friendly gear such as sportswear retailer JD Sports, music-seller HMV.

 

A huge warehouse in north London owned by Sony Corp. subsidiary Sony DADC was torched on Monday, destroying thousands of computer games, DVDs and CDs — including the stock of a distributor for dozens of independent music labels.

 

Domino, one of the labels affected, said the new single by British band Arctic Monkeys will only be available for download only because it has no physical copies to ship to stores.

 

Colin Stanbridge, chief executive of the London Chambers of Commerce and Industry, said the riots could not have come at a worse time — less than a year ahead of the 2012 Olympics and with Britain's economy still fragile after a prolonged recession.

 

"At a time when the capital's businesses should be focusing on growth and job creation, the riots have prevented them from going about their day-to-day business," he said. "Many firms have had to put contingency plans in place, with some forced to close early in order to save their property from possible criminal damage."

 

The Association of British Insurers says insurance companies are expecting losses of "well over" 100 million pounds ($160 million) from the mayhem, although Rolf Tanner, spokesman for insurance giant Swiss Reinsurance Company, said all estimates of the cost of the damage are premature.

 

"The unrest has so far hit mainly the poorer areas of London and other cities, where insurance density and insured values tend to be lower than the country average," he said.

 

Most retailers hit by looting will be covered by insurance polices, but James Lowman, chief executive of the Association of Convenience Stores, said some small shopkeepers "might be uninsured or underinsured."

 

He said those retailers can use a piece of 19th-century legislation called the Riot Damages Act to claim money back from the police for failing to protect them — but only if they apply within 14 days. Lowman said his association was trying to get the government to extend that period.

 

He is more worried about the long-term effect on small businesses, should trouble and fear persist.

 

On Tuesday stores in many parts of London closed early or even boarded up their windows from fear of violence that never materialized.

 

Lowman said that trade from shutdowns can't be claimed back from insurers. And small stores can't afford the private security guards employed by larger retailers.

 

"In Northern Ireland, which had trouble with riots for many years, there is evidence there that sometimes retailers just give up," Lowman said. "And that's tragic."

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Frank Jordans in Geneva contributed to this report.

 

 

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