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October 22, 2019

Weak sterling prompts fall in UK millionaires

By Arun Kakar

New research sheds light on global wealth composition – with an uncertain outlook for the UK, reports Arun Kakar

Global wealth grew by 2.6 per cent to $360 trillion over the past year, thanks to strong figures recorded by the US and China. Despite trade tensions, the two nations grew $1.9 and 3.8 trillion respectively, according to the Credit Suisse Research Institute, as Europe trailed behind with a growth of $1.1 trillion. As of mid-2019, the report estimates that there are 46.8 millionaires worldwide, a rise of 1.1 million from last year.

The US, it found, contributed to more than half of this growth, with 675,000 new millionaires minted over the period.

In the higher wealth bands, 55,920 US adults fall into the $100 million wealth band, with 4,830 individuals with net assets of more than $500 million. However for the first time, China recorded more members in the global top ten wealth percentile than the US, with 100 million people to the US’s total of 99 million.

The number of millionaires worldwide is set to reach almost 63 million in the next five years alone, as the report projected global wealth to rise by 27 per cent to $459 trillion by 2024. Low and middle-income countries will be the ‘primary driver’ of this rise, it said, as they will account for 38 per cent of the growth, although they currently make up 31 per cent of current wealth. The number of HNWs worldwide is set reach some 234,000 over the same period.

The UK, on the other hand, has a posted a ‘modest’ loss of 27,000 millionaires as wealth per adult grew by 2.2 per cent overall over the last year. After a ‘difficult year’ following the result of the 2016 EU referendum, both the UK’s exchange rate and stock market fell sharply, but wealth per adult between 2017 and 2018 rose by 21 per cent in GBP terms and 13 per cent in US dollar terms. Average wealth in GBP is now 41 per cent above its 2007 level, but the UK’s outlook now ‘uncertain’, the report noted, with future prospects depending on the outcome of Brexit.

The annual Credit Suisse report, which began in 2008, said that over the last decade, emerging markets including China had become ‘increasingly important’ to the world economy, contributing two-thirds of real wealth gain since 2008 – double the contribution of North America. China’s solid performance under the US Dollar and local currency unit measures. Average real growth of the US dollar in Europe has been negative, a factor that it said was in part due to the ‘retrenchment’ of the euro.

‘With almost two decades of data at our disposal, we can see two distinct phases of wealth growth,’ says Anthony Shorrocks, author of the report. ‘The century began with a “golden age” of robust and inclusive wealth creation.

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‘But wealth growth collapsed during the financial crisis and growth never recovered to the level experienced earlier.

‘There was a seismic change at the time of the financial crisis, when China and other emerging market economies took over as the engine of wealth creation. Meanwhile, the United States has maintained an astonishing 11 year spell of increasing wealth per adult.’

Arun Kakar writes for Spear’s

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