THE economic impact of the terrorist attacks on the US has continued to hit British industry with almost 2,000 jobs being cut.

Aerospace giant BAE Systems dealt a huge blow by unveiling plans to axe 1,700 jobs, while tour operator Airtours said it had cut 1,600 posts, including 200 in this country, in direct response to the September 11 attacks.

BAE Systems said the jobs would go in its regional jets business because of a downturn following the attack on the World Trade Centre.

The cuts, which will hit factories in Manchester, Preston, Bristol and Prestwick in Scotland, were described as "devastating" by union leaders.

BAE Systems chief executive John Weston said the company had completed an assessment of the impact on its business of the "severe downturn" in the commercial aerospace market.

"Since September the trading outlook in these markets has changed substantially," he said.

Profit expectations for the Airbus, which BAE helps build, had been reduced significantly next year, and the outlook for regional aircraft had "deteriorated sharply", said Mr Weston.

"Regrettably it has been concluded that our regional jet business is no longer viable."

BAE said it was scrapping a programme to build a successor to the current generation of regional jet aircraft.

Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said: "This is a devastating blow for the country's aerospace industry. We will be consulting with BAE to see if we can reduce the job losses."