The IRA couldn't destroy the Mancunian spirit - and neither will the latest attack

Terrorism has carved out the modern city of Manchester. Twenty-one years ago, an IRA truck packed with 1,500kg of fertiliser turned a sizeable area of the city centre into a smoking wreck. It was 15 June 1996, my first day at work as a shop assistant in the grand old Kendals department store, just down the road from the bomb. We were gathered in a scruffy upstairs meeting room for a routine briefing by the head of security when it went off. 

We could hear the blast before it impacted, barrelling down Deansgate like an invisible tsunami. When we emerged (thankfully unscathed) onto the street for evacuation, the first thing we saw was that the shop's ground-floor display windows had all been shattered and the fashion mannequins were lying half in and half out.

Monday night's atrocity in the Manchester Arena is simultaneously less destructive and more so. Unlike in the IRA's outrage, which caused upwards of £700m of damage, the direct destruction of physical property this time seems likely to be minimal. But the human cost this time is on a different scale of grief. 

There were some 220 injuries from the 1996 blast, some of them serious, but no fatalities, mainly because the IRA gave an hour's warning. Suicide bombers, however, don't give warnings. At the time of writing, 22 people are already dead and 59 injured. And the horror of the target this time - young people attending a pop concert - makes this feel like it belongs in a different category: a separate species of depravity.

Manchester's modern economic renaissance arguably began with the 1996 bombing. The city responded to the devastation with an imaginative programme of urban regeneration. It has delivered new transport infrastructure, buildings, renovations, clean-ups and the fashioning of some wonderful public places. An extensive overhaul of the previously unlovely Victoria station, adjoined to the very Manchester Arena complex where Monday's mass murder took place, was completed only two years ago.

Public investment has helped to uncork the animal spirits of the private sector. Thousands of new firms have come. International firms, from Adidas to Kellogg's to Gazprom, have located their UK headquarters in the city. Chinese investment is flowing in. The BBC has a major presence in neighbouring Salford, with possibly more media companies to follow. My old employer Kendals must now contest the luxury retail market with southern titans such a Selfridges and Harvey Nichols.

Manchester shows that "post-industrial" can be a springboard, rather than a curse. Its industrial heritage is still all around in the shape of magnificent classical warehouses, built by Victorian cotton barons. But Manchester isn't stuck in the past. It's a services-based economy now: outward-looking and confident. The warehouses have been converted into flats. In the decade to 2011, the city centre's population grew by almost a fifth, the biggest expansion of any UK city outside London. Manchester has cemented its position as the second most economically vibrant city in the UK. Northern Powerhouse indeed.

How will community relations in multicultural Manchester be affected by this atrocity now that Isis has claimed responsibility for the attack? How will Manchester's services economy cope? What will befall its thronging retail and entertainment sectors? What will happen to investment? One suspects the city will manage in the same impressively resilient way that London has coped since the 7/7 suicide bombings on the capital's transport system in 2005.

There's no going back on the Mancunian diversity front. Manchester's two huge universities mean that the city is stuffed with proud citizens of the world of all ethnicities and religions who come to study. And the students often stay after graduation. Manchester has long been a tolerant place - and that is most unlikely to change. Businesses will push on too. This economic snowball has too much momentum to be stopped by a maniac with a rucksack full of explosives and a head full of medieval bigotry.

Manchester's capacity, its symbolism, its openness, its sheer importance, all made my home city a target for the merchants of hatred and violence back in 1996 and, it seems, in 2017. That openness, of course, is the city's vulnerability. But, as with all great cities, its vulnerability is also the source of its strength. And that strength will, once again, show itself.

An economics lesson that the Borough Market terrorists failed to grasp

It’s unlikely that the pathetic psychopaths who ran amok in Borough Market randomly stabbing Londoners on Saturday night gave any thought to the economic significance of their target. But the city’s foodie hub is a powerful case study in the phenomenon of retail clustering.

From one perspective, it’s odd that so many artisan grocers and luxury delicatessens would want to cram themselves into one relatively small place beneath the railway arches of a busy London train station. Competition is ferocious. Business rates are punitively high.

Why not spread out across the capital? Sadly, there are no artisan delicatessens where I live in the unfashionable suburbs of south London, even though there are plenty of folk with a sufficiently high disposable income to shop in them. If these shops dispersed they would have much less competition, a higher share of a reasonably large local market and lower overheads.

But there are two forces at work on retailers, one centrifugal and centripetal. The centrifugal force is the desire to reduce local competition by striking out alone. The centripetal force is the urge to benefit from higher footfall by clustering.

If a retailer is selling a good or service that is considered a luxury rather than a staple, the clustering force often prevails. Clustering in Borough Market has created a world-class foodie destination and customers are sucked in from far and wide. People won’t travel into London Bridge to buy a pint of milk, but they will to buy a chorizo roll from Brindisa or a Lemon Chiffon cake from Konditor & Cook.

The same applies if a purchase is relatively infrequent, which is why one often finds two rival retailers flogging washing machines, or sporting goods equipment, sitting right next to each other in out-of-town retail parks. More competition, yes, but also more customers.

Whole areas benefit from clustering through positive spill-overs. People shop for their artisan cheese and their cured ham in Borough Market and then enjoy one of the many high-end local restaurants or independent coffee shops. They stroll by the river and drink in one of the pleasant Thames-side pubs. It’s a day out, often turning into a night out too.

Clustering, economies of agglomeration, network effects and positive spill-overs, on a larger scale, explain cities themselves. There are spill-overs galore in any big city.

To expand on the example at hand, wealthy City workers cross London Bridge to have lunch in Borough Market. Doctors come from nearby Guy’s Hospital for a post-shift drink. Tourists saunter over from the South Bank and vice versa. Firms buy floor space in the Shard, despite the high rents, because of the local amenities, not least the famous foodie hub next door.

This clustering is what makes cities a prime target for terrorists. They seek to leverage the murderous rage of their risibly small band of fanatics by assaulting a place where they know there will be lots of innocent victims. They seek an iconic location so they can create a mass psychological impact through their despicable violence.

But clustering is also why cities are so resilient, and why the waters of commerce tend to close over the economic damage they cause surprisingly quickly. There is so much capital invested in cities – the refurbished shop, the new office block, the renovated train station – that people have to keep using it to pay the bills. There’s economic momentum. Londoners are grieving for the victims of the London Bridge massacre but they aren’t “reeling”, mainly because they haven’t got time to reel.

And the way to limit the economic damage that terrorists seek, in part, to create is not to panic, but to carry on spending and enjoying all the wonderful experiences a city has to offer. As Rudolph Giuliani urged New Yorkers immediately after the 9/11 attacks to “buy a pizza, take the kids to the park, see a show”, the advice in London should be: visit Borough Market.

Don’t be alarmed, as the Mayor Sadiq Khan rightly told Londoners and the capital’s hundreds of thousands of visitors at the weekend. And only a malevolent fool – or the President of the United States – would urge otherwise.