Global risks are continuing to impact an economy that is finally recovering, while significant growth of the UK economy is forecast for 2014, according to Lloyds Bank director of international macroeconomics Jeavon Lolay, speaking at the UK Jewellery Conference, which kicked off in Birmingham on Tuesday.
At the event, which was organised by the Company of Master Jewellers, Lolay delivered mixed news about the state of the global and UK economy and what that means for public spending.
Additionally, Lolay associated poor performances of gold with less safe haven demand. He said that holding gold has become too expensive for investors who are now seeking return and equity from their investments. "Just like other safe haven investments, gold is now not so strong as an investment safe haven," he confirmed. It has been well documented that the price of gold crashed in the first part of 2013 but recovered in late June.
Lolay went on to explain that the recovery of the economy is finally underway and that now the challenge is to sustain the improvement in overall business and global confidence. While he pointed out that financially 2013 hasn’t been a huge improvement on 2012, the forecast for 2014 is much better, particularly for the UK. He said: "The UK has been remarkable in terms of turnaround. At the start of the year we were talking about the possibility of a triple dip recession and now it turns out we didn’t even have a double dip." He said that in the next week weeks he is confident of a 0.8 to 1% GDP growth and said that in terms of growth, going forward the signs are strong for the UK, stating that for the last eight consecutive quarters household spend has grown. "Confidence in the UK economy exists in consumers holding it up and companies investing," he said. "We are seeing a very positive outlook for the UK compared to the rest of the world. We are seeing that in a pick up of interest rate expectations."
Lolay highlighted ongoing signifiant global risks to the economy such as Middle East tensions and oil prices, rising political and fiscal risk in the Euro area and the likely deflation of the Chinese credit bubble. He said: "There’s an awful lot of catching up to do from the financial crisis. Emerging economies benefited more from the economic turmoil than developed."