Counter terror police are investigating a suspected far-right inspired attack in which a 19-year-old man was stabbed.
The attack happened in Stanwell, Surrey, on Saturday night where a man carrying a baseball bat and knife was seen shouting racist comments.
The victim suffered non-fatal injuries and was taken to hospital.
A 50-year-old man was arrested on suspicion of attempted murder and a racially-aggravated public order offence.
Assistant Commissioner Neil Basu, head of Counter Terrorism Policing, said: “Whilst this investigation is still in its infancy, it has hallmarks of a terror event, inspired by the far right, and therefore it has been declared a terrorism incident.”
Categorising it this way allowed the force to “use all of the specialist capabilities available to establish the full circumstances”, he said.
The investigation is being led by Counter Terrorism South East in collaboration with Surrey Police.
Mr Basu said: “Police are committed to tackling all forms of toxic extremist ideology, which has the potential to threaten public safety and security.”
The man had been seen brandishing weapons and shouting abuse on Viola Road. When police, including armed officers, arrived they found several vehicles damaged.
Nemer Salem, who lives on Viola Road, said he heard him shouting racist abuse out of a window.
Mr Salem, who came to London six years ago from Syria, said he had moved to the area two weeks ago.
The 24-year-old said: “He started saying some crazy things about Muslims and just shut the window and went inside.
“I’m a Muslim and I got a little bit worried.”
‘Scary and sad’
He added: “He wasn’t showing himself, he was opening the window but the curtain was closed. I felt worried and I just speeded up.”
Abhishek Agrawal, 40, and his wife Tanu, 36, who run a catering company based in the street, said they were shocked and scared.
Mr Agrawal said: “We have lived here for nearly a decade and have never heard of anything like this happening.
“It’s very scary to hear this has happened, I work in central London and often come back late on the last bus.”
Mrs Agrawal said: “It’s very scary and sad.
“It’s a very quiet area. We have never heard of anything like this.”
Local officers have been deployed to provide reassurance and protective security advice to communities, places of worship and businesses.
Anyone with information regarding the incident has been urged to contact Surrey Police.
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