The recession has forced the emergence of the "credit crunch diamond ring", with jewellers reporting prospective bridegrooms opting to downsize to smaller stones. Jewellers in London's Hatton Garden, the largest cluster of jewellery retailers in the UK, say the economic downturn has seen couples looking for bargains that still bling.

Russell Davis, senior salesman at Bernstones jewellers, said customers were seeking stones slightly less than one carat that looked like a full carat to the untrained eye. "Stones that are 0.80 and 0.90 of a carat are selling well," he said. "Something that looks like a full carat. If you go to one carat the price can jump by two-thirds. You might pay about £995 for a 0.90 carat and £1,400 for a one carat."

Maureen Brown, sales assistant at Bolyn jewellers, said: "Everyone is looking for a bargain. The price drops drastically when you go under a carat. We have seen a switch to stones just under – at 0.90 of a carat – from a carat to a carat and a half."

Brown said the jewellers said seen a decline in sales of necklaces and earrings since the downturn but demand for rings remained fairly stable, with just a slight dip. Spencer Cabel, head of retail at County jewellers, said people were not compromising on the clarity and colour of diamonds but were willing to downsize to smaller stones.

While the classic, round, brilliant-cut stone remained the most popular diamond, the slightly cheaper shapes, the princess and emerald cuts, and smaller stones had become more popular of late, possibly because they lost less in resale value.

"There are still some people just focused on the size of stone, but most people would rather compromise on size rather than colour or clarity," he said. "With the princess and emerald cuts you can get a good resale price. The 0.50 carat stones are doing particularly well right now." Cabel said sales of diamond earrings in the £400-600 price range had dropped slightly in the past six to nine months, but demand for fancy pendants remained strong.

Most jewellers in the famous jewellery quarter said sales of larger quality diamonds, of two carats and above, had been largely unaffected by the economic downturn as the clientele were wealthy enough to be unscathed by the recession.

Steven Perry, director of Dynasty Jewels, said it had seen increased demand for bigger stones as customers chose to invest in diamonds because they did not trust the banks to keep their money safe and property was no longer as safe an investment. The trend for slightly smaller stones was revealed after the diamond giant De Beers yesterday announced that its profits had been crushed by the drop in demand for luxury products.

The world's largest diamond producer reported a 99% drop in net profits for the first half of 2009, to just $3m (£1.82m). It made $316m in the same period a year ago, before the economic downturn deterred even the wealthy from splashing out on non-essentials. Has the credit crunch led you to downsize your engagement and go for a slightly less bling ring?