COMMENT: Rising hallmarking figures are great news but the party may be short-lived

By Scott Thompson, founder and CEO of Carat* There is growing evidence that many parts of the UK are coming out of the great recession. I am pleased that many of my colleagues and friends in the jewellery industry are sounding more upbeat. However there is a risk that the very things that got us into the great recession in the first place are coming back to haunt us. While I won’t deny there have been some great improvements in sales, it is hard to get excited if there are some economic clouds on the horizon that may require some of us to put our rain jackets on, again. Particularly the Chinese market, there is a significant slowdown in growth in this area with some hard truths to swallow as one of the fastest growing economies deals with its own housing and credit bubble. That bubble was formed for the large part off the back of the 2008 global meltdown, as China still wrestles with trying to switch from an export economy to domestic consumption. Meanwhile in the UK, quantitative easing, and suppressed interest rates are contributing to ever rising housing prices based upon a national obsession with this asset class. This perfect storm may just be planting us right back where we started in 2008. Rising hallmarking figures at our assay offices are great news for our industry but if it is based upon the fact that people are feeling 'house rich' again, the party may be short lived as we saw only five years ago. I am of the opinion that real estate prices should more or less only be able grow with wage growth, especially since this is how our mortgages are paid (with the exclusion of London that has to deal with external forces). If house prices increase 20 per cent in a year and salaries are technically shrinking with inflation, where does the extra money come from? In the words of the governor of the Bank of England, Mark Carney: rising house prices pose biggest risk to our recovery.

COMMENT: Rising hallmarking figures are great news but the party may be short-lived

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