Economists are struggling to assess the potential impact on the wider global economy of the September 11 attacks on New York and Washington and the US response. Distinct fears are of a steep rise in crude oil prices if military activity spills into the Persian Gulf or associated shipping lanes, and of a sharp fall in consumer confidence unabated by the action of leading central banks to cut interest rates.

How lasting and how pronounced those factors might be is unquantified, depending largely on the nature of the reaction by the US once alleged perpetrators are identified, and then any further attacks or retaliation.

The following is a selection of assessments by commercial banks and ratings agencies, as well as the main central banks, which all cut interest rates within less than a week of the attacks.

"There are grounds to be optimistic that the impact will not be that deep or long-lasting."

"Downside risks have been further exacerbated by the recent terrorist attack on the United States."

"The recent events have increased the uncertainty and downside risks for global growth prospects.

"The EU economy has already been affected more than originally thought by the economic slowdown in the United States and in the rest of the world. The recent events will add to uncertainties and have a negative economic impact."

"Much economic activity ground to halt last week. But the foundations of our free society remain sound and I am confident that we will recover and prosper as we have in the past."

"The tragic events in the US have increased the uncertainties and downside risks for global growth prospects."

"Our economy - our prosperity - will not be destroyed."

Extracts from the statement made after its decision to cut its key rates by a quarter of a percentage point to 4.75 per cent:

"Falls in stock markets around the world, and the likely impact on confidence, suggest a weaker outlook for global activity than appeared likely at the (BoE) Committee's meeting earlier this month. It is too early to make an informed judgment about the scale of the impact on the UK economy. But the direction of that impact and the associated risks are clear. The Committee decided that an immediate reduction of interest rates was, therefore, appropriate. The Committee will have an opportunity at its scheduled meeting in October to assess more fully the impact of recent events and the prospect of meeting the inflation target in the medium term."

Extracts from a statement made after its decision to cut its key funds target rate by half a percentage point to 3 per cent:

"Even before the tragic events of last week, employment, production and business spending remained weak, and last week's events have the potential to damp spending further. Nonetheless, the long-term prospects for productivity growth and the economy remain favourable and should become evident once the unusual forces restraining demand abate.

"For the foreseeable future, the committee continues to believe that against the background of its long-term growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness."

Extracts from the statement made after its decision to cut its main lending rate by half a percentage point to 3.75 per cent:

"In the view of the governing council, the recent events in the US are likely to weigh adversely on confidence in the euro area, reducing the short-term outlook for domestic growth. As this is likely to further reduce inflationary risks in the euro area, a lowering of the ECB's key interest rates is appropriate. The Governing Council has confidence in the fundamental strength and resilience of the US economic system. Against the background of the sound fundamentals of the euro area, the Governing Council remains confident that the slowdown in economic growth will be short-lived."

Excerpts from research note:

The principal impact is likely to be on the demand side with a fall in US consumer confidence likely to lead to a recession in the US and globally. The US response will probably take some time to develop. The critical issue is whether a nation state was significantly involved.

"The demand side could turn out to be problematical. The US economy, and thereby the global economy, was already dependent on the US consumer keeping expenditure going at a decent rate until some time next year business started to spend again too. It would only take a modest rise in precautionary saving on the part of the consumer to raise the savings rate enough to turn the moderate GDP growth in the second half of this year that we had been expecting before [September 11] to outright falls in real activity. Government expenditure will doubtless increase, as further fiscal easing is now likely to be pushed through, but it will take time to turn up in actual spending. The net effect will likely be negative, at least for the next few quarters. The US economy will likely end up in recession, and the global economy perform worse than in the early 1990s slowdown."

Extracts from assessment by the rating agency:

"As severe and devastating as the September 11 terrorist attacks on New York and Washington are, they will not stop the US economy or collapse the US financial markets.

"The initial response in financial markets is likely to be a flight to safety and a sharp fall in prices of a wide range of securities, currencies, and commodities; this is a normal pattern in markets in times of stress. Reports from European and Asian markets, the foreign exchange markets, and the US bond markets show some stability and a rebound from the worst levels seen immediately after the attacks.

"Over the next several weeks, Standard & Poor's expects the US equity markets to establish a trading range close to the levels at which they closed on Monday, September 10. A short and moderate recession in the US now appears likely. The big question facing the economy is consumer and business confidence. Standard & Poor's expects modest declines in GDP of one-half to one percent in the third and fourth quarters of 2001, with a recovery beginning in the first quarter of 2002.

"A budget deficit in fiscal 2002 (beginning Oct 1, 2001) is more likely. However, this is the right policy for a sluggish economy, growing at less than its potential."

Excerpts from research note:

"The structure of demand might change later on if the US government decides to spend more resources for the new kind of warfare that is now emerging. This can be done by reshuffling government spending, for instance spending relatively less on the star wars programme, or, more likely, by raising overall government demand relative to total demand. A big national effort to raise defence spending might actually require tax increases which would hurt private consumption.

"The US economy is in trouble once consumers decide that enough is enough, that their balance sheets do not allow them to go on spending as if there were no tomorrow. So if consumers decide that times have become too uncertain to continue buying new homes as before, housing inflation will end, which will also mean that the overall wealth effect (stocks and real estate values) may go into reverse.

So far, US consumers have always surprised the rest of the world by their unshakeable optimism, and they may do it again. In the tug of war between manufacturing, which is in recession, and private consumption, which has been very strong, consumers have prevailed until recently and have thus kept the US economy afloat. If they now give in, a genuine recession would certainly follow. It is too early to tell.

Extracts from a statement:

"We believe that with this terrible attack, and with the possible political and military reactions, the downside risks for economic development have risen, particularly as the global economy is in a fragile state at the moment. But we continue to see a world recession as unlikely.

"Opec has already stated it does not want to profit from the situation. If there is no military action in the Middle East, which as during the Gulf War would lead to a sustained rise in oil prices, then the economic impact from this side could be limited."

Excerpts from research note:

"The terrorist attacks are without precedent in terms of scale, organisation and the resulting tragic loss of life. This makes comparisons with previous crises and forecasts of what happens next difficult.

"The timing could hardly be worse given that fears of US and global recession were already rife. Business, consumer and financial market confidence will be hit, depressing global activity. A presumed Middle Eastern connection is pushing up oil prices, which may push up headline inflation while adding to the squeeze on global activity by reducing the purchasing power of oil consumers.

"Beyond the immediate knee jerk market responses, much will depend on the nature of the responses of the US and any counter-retaliation by the perpetrators. The ultimate sale and damage from the resulting conflict is impossible to judge at this stage."