You thought big spending went out with the Eighties? Wrong. Extravaganc e is back - only it's a little more discreet this time around
Charles has spent over pounds 9,000 on his wife this Christmas. He has bought Caroline a silver-gilt snake bracelet and a Rolex watch, both dating from the Twenties, for pounds 705. She will also get two ribbed jerseys from Agnes B at pounds 133 and an oak Gothic-revival bookcase made in 1870, at pounds 8,500.

Are you shocked? If so, you're probably one of those expecting to spend around pounds 75 - the national average - on your partner. If not, you may be one of the new breed of high earners for whom New Britain means new wealth.

Big money is back. Sales of second homes in the country are up. Porsche expects to sell 40 per cent more cars here this year than last, with the pounds 35,000 Boxster in most demand (a salesman in Cheshire recently sold 24 Porsches in a fortnight). Rolls-Royce and BMW are doing better than for several years. The most expensive restaurants are full; so are executive boxes at the theatre and sporting events.

Gossip columns have begun to show signs of the return of conspicuous spending: the pounds 13,000 meal out; the pounds 30,000 crate of wine that was drunk rather than laid down; the computer businessman who gave a new BMW to every one of his sales force to land 25 contracts. The streets around his office are now so full of BMWs that other companies have started to complain. But there are big differences between the new boom and the Thatcherite Eighties. This time around the very wealthy are spending more carefully, more quietly, and with much more taste.

Charles is typical of this breed. His second name is Levison, and he is deputy chairman of the Chrysalis group of music and media companies. His wife is an interiors writer and they have two grown-up daughters, Eliza and Georgia, who will receive presents worth a total of pounds 2,729. We know all this because he was willing to discuss his shopping in the Christmas issue of Vogue. Now that the feelgood factor is back, money has started talking again.

Mr Levison is unapologetic. "These are assets, which will last, rather than toys which are given for Christmas and lose their value straight away." He does believe that wealth brings responsibility. "One has a duty to serve the community you live in. As a professional person who is paid for his time, the hours I have given to charitable causes over the years are of far greater worth than the amount of money I have spent on these presents."

If the Eighties was the "me" decade, in the so-called caring Nineties it's okay to have wealth as long as you have style, taste and some sort of social conscience. Princess Diana could visit a homeless hostel during the day and wear a designer gown by night; she could be friends with Mother Teresa on the one hand and the Al Fayeds on the other. Tony Blair can discuss his vision for a more compassionate Britain while dining at the River Cafe. The greatest sin a rich person can commit is to be vulgar.

Many of the new millionaires have wealth based on the latest technologies, from computer games to the Internet.

Then there are the high earners in service industries such as advertising, the arts, fine food, sport and the media. These are often young people who grew up with the post-crash idea that spending should not be ostentatious. The clothes they buy from design houses such as Jil Sander and Prada have minimalist labels, or none at all.

Some equity partners in the top law firms earned a share of their company's profits worth more than half a million last year. But the really big money is still in the City of London where superstar traders are earning more now than during the Thatcherite boom.

Last week three directors at Mercury Asset Management earned pounds 40m between them when their company was bought by the American banking giant Merrill Lynch. Carol Galley and her two colleagues have worked hard to keep a low profile and will spend their millions discreetly. True, they are members of the City elite, but this year a managing director at an investment house can expect to earn pounds 1m, including shares and options, while colleagues in their late twenties may be on pounds 300,000.

Despite these figures, there are few signs of wild spending in City wine bars and pubs at lunchtime. The decor in the Corney & Barrow bar at Broadgate is very Eighties - clean lines, chrome fittings, clocks showing the time in money markets around the world, share prices on a TV screen - but there is not a pair of red braces to be seen. The mood is sober. The special lunch offer is a bottle of Laurent-Perrier Ultra Brut champagne and 30g of caviar for pounds 57. There are no takers. Far more stand up to eat take-away sushi, before hurrying back to their desks. Lunch is still for wimps, it seems.

In 1987 you could ask a bright-eyed young trader how much he was "pulling down" and be sure of a quick, cocky answer. Greed was good and money was macho. Now silence is golden. "Nobody I know would want to talk publicly about their salary," says Matthew, a 25-year-old futures trader with a major company based at Canary Wharf. "It's naff, isn't it? Those who are earning the big money know they are on to a good thing. There is a certain embarrassment."

Matthew will only talk anonymously. He gets to work before eight and goes home around six, unless he's being wined and dined by other City firms who work for his. A decade ago traders his age would have expressed a burning desire to make lots of money and get out by their mid-30s, before burn-out. That is no longer possible unless you are at the very top, so juniors aspire to rise within the company, which means conforming.

Some retro-traders still celebrate a good day on the markets by placing pounds 1,000 behind the bar, but young guns like Matthew are just as likely to spend their money on clothes. Candy-striped shirts and loud braces have been replaced by suits from new British designers such as Ozwald Boateng and Timothy Everest, who is based near the City in Spitalfields. Christopher Tarling, who works with Everest, says lawyers and stockbrokers are spending more. "A bespoke suit from here would cost around pounds 800, but it goes up to pounds 1,000 when you use cloths like a super 100 light wool or mohair. Whereas they used to buy one or two suits when their bonuses came through, now they are buying three or four at a time." His most expensive suit, in cashmere, costs about pounds 2,000 and "it would probably be bought by someone in advertising".

In the conservative City, where brown shoes are still frowned upon, nobody would dare to be that flash at work. "None of the people at my company who are earning a million pounds a year ever talk about their social life," says Matthew. "They are the ones who are in early in the morning and leave late, and work hard all day."

Howard, a middle-aged senior manager with a major asset company, who also wants to remain anonymous, says the City has changed. "The Eighties was an extraordinary boom time - anybody who happened to be in the right place did well. Now people have to deliver. Hours worked are longer. It is a much more professional place, and behavioural standards of all kinds need to be better."

BONUSES at most investment banking firms will be up to 30 per cent more this year than last, according to the executive recruiters Russell Reynolds. The increases are confined to star performers rather than being shared by all - and some working in specialist areas may earn more. Competition for the best is global, which means London firms must match the huge packages offered on Wall Street. "Despite recent turbulence the City is having another record year," says Elaine Small, managing director. "As the star system becomes the norm, pay for performance is the order of the day."

Many of the highest performers were young whizz-kid traders during the Eighties boom helped to maturity by the crash. "The average age in the City now may be five or ten years older," says Howard. "The things they are buying reflect that: if you're married with three kids, what good is the Porsche? Also, people saw that the boom ended, so they are tending to save or to invest. They may perhaps buy a bigger house, or some nicer furniture, or a painting."

Those who do so go to someone like David Scully, underwriting manager at Nordstern Art Insurance, to arrange protection for their investments. "Whereas 10 years ago it was just city dealers, now it's people in public relations, the music business, lawyers, novelists, media figures. Labour supporters, many of them."

Tastes have also changed. "Then the brokers went for heavy, gilt furniture from the Continent, with lots of red velvet. Now City people tend to be rather conservative. With the first bonus they buy the Georgian rectory, and with the second they buy the furniture. To do that, you've got to spend six figures. We're waiting for the price of Georgian silver to go up when they start getting their third big bonuses."

One blue-chip Georgian property sold recently is Culham Court, an 18th- century house on the Thames near Henley in Berkshire with 689 acres. It raised pounds 12m, almost twice its original asking price, and was bought by Martyn Abib, chairman of Perpetual Fund Management Group.

So why is Georgian property and art so popular? "A cynical colleague of mine suggested that the only time City people watch television is a Sunday night, when all the costume dramas are on," says Mr Scully. "But this is nice stuff, and it is English. People have a hankering for the past. It's relaxing to play the country squire at weekends."

Dick Ford, a director of the estate agents Knight Frank, believes the top end of the English housing market is experiencing "a new age of grandeur". His company recently sold Aubrey House in Holland Park for pounds 20m. The early-Georgian mansion has two acres of garden and a terrace of three houses in the grounds. Its new owners are the Rausing family - Swedish tax exiles who made their money from Tetrapak containers and have lived in Britain since the early Eighties.

"There was a time when big houses of any scale were nearly all divided into small apartments," says Dick Ford, who was instructed by the Rausing family to make no further comment on the sale of Aubrey House. "People wondered whether anyone would ever be able to live in big houses with staff again. Well, it seems they can now. We have experienced a new age of wealth creation. People have made a considerable amount of money in business and have not been taxed too grossly."

It does cost money to live in a trophy house and maintain it, Ford says. "Nobody wants to buy a grand house and live in it with G-plan furniture and drink Blue Nun."

Stephen Mould, of Sotheby's wine department, confirms that big spenders appear more knowledgeablethan a decade ago. Wine prices have been rising by the month for a year or so. Last month a case of Mouton Rothschild 1982 was sold for pounds 3,960, while a case of the same vintage Chateau Petrus went for pounds 9,900.

Sales confirm the impression that big money is being spent in restaurants, and not in wine bars, as it was a decade ago. The case of the three businessmen who ran up a pounds 13,091.20 bill at Le Gavroche in Mayfair a few weeks ago has already passed into legend. The meal itself cost pounds 220. They also treated themselves to cigars and brandy, but it was the six bottles of wine that really cost money. After one glass each of a pounds 4,950 bottle of 1985 Romanee- Conti burgundy, they decided it was "too young" and gave the rest to the staff. Not surprisingly, the general manager, Silvano Giraldin, says the three men were "very nice people". Diners often pay pounds 2,000 for a bottle of wine at Le Gavroche, Giraldin says.

According to Leslie Sklair of the London School of Economics, the big spenders have never gone away. "The old idea of conspicuous consumption, which fell out of favour, has always been bubbling away under the surface. It is a question of whether the people who are spending feel confident about doing so in public. There will be some people who delight in flaunting their wealth in the face of poverty. It is a reflection of their ideological view that if you work hard you can get rich. Ostentatious displays of wealth may simply be a way of expressing the feeling that there are a lot of poor people around but you're not one of them."

Dr Sklair believes the big spenders are just acting like the rest of us, only on a bigger scale. "This is simply taking the culture of consumerism to its logical conclusion. Someone who is living on subsistence and can only afford to enjoy a packet of Marlboro or a can of Coke every fortnight is still indulging in conspicuous consumption when he or she does so."

So maybe we're all guilty. The real question for many of us, though, is whether this fountain of wealth will trickle down. It may be too soon to tell but one possible sign is the recent return of that truly Eighties phenomenon, the 100 per cent mortgage. Negative equity and the uncertainty of the job market meant lenders were unwilling to offer these during the recession - and their return can be seen as a vote of confidence in the employment and housing markets.

Some experts worry that we'll borrow too much and run into huge debt, just like in the bad old days, but 100 per cent mortgages are useful for anyone who has saved to clear negative equity but not quite got enough to move. The trouble is, they are mainly going to young, newly qualified professional people who can persuade lenders that their salary will rise and they'll keep their jobs. Which brings us full circle back to those young guns within the charmed circle of the City, the legal profession and service industries.

There is, however, one way that anybody can get their hands on new wealth - the National Lottery, whose presence in our lives is one of the major differences between the state of the nation in 1987 and now. In three years it has created 449 new millionaires, most of them willing to spend their winnings on the good life. The big house, the fast car and the expensive holiday are top of many shopping lists.

The British public has spent more than pounds 14.5bn on tickets, creating a culture that no longer feels sheepish about gambling or, indeed, spending. While we go on buying that bi-weekly ticket and dreaming of riches bestowed at random, it is hard to criticise City stars like Carol Galley who play the money markets and win.

That was then ... this is now

In 1987 we wanted:

1 Porsche Carrera

2 Red braces and striped shirts

3 Penthouse apartments

4 Bollinger champagne

5 Health club fees

6 Heavy gilt and red-velvet

French furniture

7 Trophy pictures by Van

Gogh (above) and Picasso

8 City wine bars

9 Beaujolais

10 Filofax

In 1997 we want:

1 Porsche Boxster (above)

2 Bespoke suits from Timothy

Everest and Ozwald Boateng

3 Country homes

4 Fine wines to lay down

5 School fees

6 Georgian homes

7 Georgian furniture and silver

8 Traditional restaurants

(such as Le Gavroche)

9 Mouton Rothschild 1982

10 Psion and laptop