UK economy expected to deliver significant growth in 2014.
By Kate Doherty
There will be less demand for gold as a safe haven investment as the economy continues to recover, according to Lloyds Bank director of international macroeconomics Jeavon Lolay who was speaking at the Company of Master Jewellers’ (CMJ) UK Jewellery Conference.
Lolay explained that global risks are continuing to impact an economy that is finally recovering but said that significant growth of the UK economy is forecast for 2014.
At the event 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."
Lolay said that he is confident of a 0.8% to 1% GDP growth in the next few weeks. He added 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."