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More worryingly for Britain, the report shows its market share has shrunk by 3% in the past year to £8bn while the US share has grown by 5% and global sales have increased by 10%.

The nature of the market means that it is difficult to attribute the UK decline to a single cause, but the British Art Market Federation, which commissioned the report, entitled The British Art Market in 2014, from leading art market analyst Dr Clare McAndrew and her company Arts Economics, points the finger squarely at the Artist's Resale Right (ARR) as a significant factor.

ARR only applies in the Post-War, Contemporary and Modern art sectors, but they are the most revenue-driven disciplines across the international art market, accounting for 70% of all money changing hands for fine art and close to half all money changing hands in the British market as a whole, according to the report.

While it is widely acknowledged that the €12,500 cap on ARR means that it is unlikely to affect sales directly at the top end of the sector, the bulk of activity takes place in the middle market.

UK figures for Post-War and Contemporary art in 2013 showed a 12% decline as sales grew by 11% globally. In the US and China, where ARR does not apply, sales in this sector rose by 20% and 17% respectively in the same period.

In fact, in the five years from 2008, which straddle the extension of ARR from living artists to dead artists' estates where works remain in copyright, the UK's share of the Post-War and Contemporary art market has more than halved, from 35% to 15%.

The report adds further figures on sales of work by living artists, as well as separate figures for sales of work by artists whose estates qualify for ARR, both also showing increasing divergence with the US as the latter grows.

The story is not all bad. The UK still accounts for 20% of the entire global market, with Europe's next largest market, France, standing at 6%. However, the US, with 38%, has seen an overall rise of 3% in global market share since 2008 and China, with 25%, a mushrooming increase of 16%, while at the same time the UK has seen its share fall 14% from 34%.

A major plank of the EU harmonisation directive that forced the UK to adopt ARR was that it should be introduced globally to ensure level competition across the market.

The key concern now is that not only has that still not happened in the two leading markets of the US and China, but that is looking increasingly unlikely that it will ever happen.

At a more regional level, the directive aimed to harmonise market forces across the European Union, leading to a redistribution of sales across member states. As the figures show, this has not happened either.

"We always anticipated that the introduction and then expansion of ARR would damage our global competitiveness if it was not introduced in the US and by our other non-European rivals, and this is now clearly the case," said BAMF chairman Anthony Browne.

"What is of additional concern is that it affects the sectors which contribute most in terms of value and which are traded much more internationally than anything else, making it easier for those works to be sent elsewhere, beyond the authority of the ARR, for sale.

"If this trend continues, the damage could be far worse."

The report is available for downloading free at www.tbamf.org.uk