London Briefing/Chris Johns: National stereotyping is often best avoided, but the British do sometimes possess a remarkable ability to display tolerance and, dare I say it, a stiff upper lip in the face of adversity.

The reaction of most Londoners last Thursday to the tragedy unfolding in Madrid was mostly one of quiet sympathy.

Walking around the financial district, the City, it was hard not to sense an increased security presence: checkpoints that are usually unmanned these days seemed to have acquired a policeman or two. People seemed to look up and take more notice than usual of the sirens of passing police cars and fire engines.

But by and large, Londoners have grown used to the closed roads, banks of cameras and other paraphernalia associated with the "ring of steel" that the City built in the wake of the two IRA bombings of Bishopsgate.

Walking around a large trading floor shortly after the bombing of Canary Wharf, an equity salesman from Kildare quietly told me that he was amazed at how few people had made any of the obvious remarks to him.

In fact, the only people to have shown any awareness of his nationality were all continental Europeans. The Brits had, to a man, avoided any insensitive remarks - at least within his earshot. A near punch-up with a Dutch colleague stood in stark contrast to the business-as-usual demeanour of the Brits.

If it helps to be busy during difficult times it is certainly true that the Madrid bombings prompted much hard-headed analysis. Such analysis can, of course, seem insensitive so it rarely enters the public domain - that British reserve again. But the analysts were busy and have reached a number of conclusions, few of which bode well for the future.

First, and most obviously, to the extent that the bombings were the work of Islamic terrorists, the effects on Europe's tourist industry will, for a while at least, be dire. Much of the UK's travel business is connected with flying millions of people to Spain; there will obviously be an impact there. Travel businesses pinning their hopes on an American return to Europe this year will probably have to think again.

Second, the election result has handed Al-Qaeda its first real political victory. And like all terrorist groups, its appetite for more will be insatiable. If this was a deliberate attempt to influence Spanish politics imagine how hard they are going to try to have a similar impact on the US presidential election this year and the British general election, probably next year. If you thought living in - or just visiting - London was risky, it has suddenly become a whole lot tougher.

Third, the extent to which all of this spills over into economies and markets depends in large part, as always, on what happens next. We learned after September 11th something about the resilience of people; we also realised that many of our economic and financial structures, while not invulnerable, possess a surprising robustness. If Madrid proves to be an isolated event, its global economic and financial impact will fade. And vice versa.

At the individual level, we can see the profound splits in opinion that are reflected on the global stage. The Spanish electorate appears to have punished the outgoing government for its involvement in the war on terror. Many British people think that this line of reasoning is appropriate - I have friends who have resigned their life-long membership of the Labour Party in response to Iraq.

Others argue that the Spanish response amounts to traditional European appeasement, something that we have been spectacularly good at for centuries. Some Londoners, shedding some of that reserve perhaps, argue that the British experience with Sinn Féin provides a small example of what happens after appeasement: appetites are insatiable; peace is merely a tactic, not a principle.

Stock markets have weakened and traditional safe-haven assets, such as bonds, rose in price following the Madrid atrocity. Hard-headed analysis suggests that these effects should fade, at least for as long as Europe and the US avoid another terrorist attack.

But it is also worth mentioning one of the peculiar aspects of "shocks". What happens next often depends on the initial state of the economy in question; it turned out that the US was actually in quite good shape on September 11th.

Europe has shown signs of weakening during the past few weeks and it would appear to be in an extremely vulnerable state, not least because of the strength of the euro.

The negative shock to consumer and business confidence that is represented by Madrid may not be large but it may be enough.