Fears are growing about the potential impact of this summer’s renewed global economic turmoil on the art market. The 2008 financial crisis sharply hit art sales across all sectors, but the market bounced back quicker than many others, particularly for blue-chip works. At issue now are two ­diverging premises: that art is a luxury brand, as sensitive to stock markets as high-end fashion and first-class flights (this is the view of those looking at the art market from the outside); or that it represents a safe investment, sought after in troubled times much like gold and the Swiss franc (the view of those with more vested interests).

Dark clouds

Since art market professionals went on their summer break, the widening European sovereign debt crises and Standard & Poor’s downgraded opinion of the US debt triggered fears of a “double dip” recession, which saw stock markets fall worldwide.

The wealthy, especially in cities such as London and New York which rely heavily on their ­financial centres, all now have less to spend. The hedge fund SAC Capital, run by the art collector Steve Cohen, was down 4% for the first week of August alone.

In the luxury goods sector in Europe, share prices are down ­between 15% and 30%. “We see significant potential downside if the crisis mimics 2008,” said Julian Easthope, a research analyst at Barclays Capital in London. He looks closely at stocks, including France’s PPR, founded by Christie’s owner François Pinault.

Sotheby’s stock has certainly felt the pinch: since 7 July, it has lost 37% of its value (falling from $47.8 to under $30, as we went to press), wiping over $1.2 billion off the value of the company. This reduces the money available to it at a time when competition with Christie’s is already eating into its profits. In the fight for the best works, both auction houses need to offer increasingly attractive terms to consignors, which is reducing Sotheby’s profit ­margins (see p59).