People walk through a Manhattan shopping center on July 5, 2024 in New York City.
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LONDON — The number of global millionaires is set to continue to rise over the next five years — with the UK a stark outlier, according to the 2024 World Wealth Report from UBS.
The number of adults owning $1 million or more is expected to rise in 52 of the 56 developed and developing economies surveyed between 2023 and 2028. Gains will be driven by Taiwan’s technology powerhouse, where the number of millionaires is expected to up 47% on the back of a booming microchip industry and increased immigration from wealthy foreigners.
This growth was followed by Turkey (43%), Kazakhstan (37%), Indonesia (32%) and Japan (28%). The two hubs where most of the world’s millionaires are based, the US and mainland China, are set to see their rates rise by 16% and 8%, respectively.
However, the number of millionaires is predicted to fall by 17% in the UK
Paul Donovan, chief economist at UBS Global Wealth Management, said the UK currently has the third highest number of dollar millionaires in the world, which he called “far more… than it deserves to have as an economy.” .
He added that countries such as France and Italy, where the number of millionaires is expected to rise by 16% and 9% respectively, are seeing more “natural” growth, while any UK growth will be offset by capital outflows due to various “factors push and pull’.
This is partly due to natural changes in the distribution of wealth as the global economy goes through structural changes and capital moves around the world, he said at a media briefing.
Other factors that will lead to a decline in millionaires are the UK’s imposition of sanctions against Russia — with wealthy Russians long using London as a home for their assets — and the “population of non-native millionaires” is constantly looking for low-tax locations such as Dubai and Singapore, Donovan added.
He did not cite the newly elected centre-left UK Labor Party as a contributing factor to the prediction. In contrast, Donovan noted that changes to the so-called UK non-resident tax regime, which were introduced by the recently toppled Conservative government, had had a “small, not material” impact.
Another country where the number of dollar millionaires is predicted to decline was the Netherlands, which is estimated to see a 4% drop in such wealthy individuals.
The report, meanwhile, sees the number of US dollar millionaires in Russia rise by 21%. Donovan said that’s partly due to currency fluctuations, as well as recent commodity and energy market trends that benefit some business owners.
Rising inequality?
UBS found that global wealth growth rebounded in 2023, rising 4.2% after falling 3% in 2022. The recovery was driven mainly by the EMEA (Europe, Middle East and Africa) region, which grew by 4, 8%, compared to 4.4% in Asia Pacific and 3.5% in the Americas.
Meanwhile, the report paints a mixed picture of growing wealth inequality. Between 2000 and 2030, UBS said wealth mobility – a person’s ability to move up a level of wealth over their lifetime – would improve overall.
People who start in the lowest wealth rung will have a 60% chance of moving up at least one wealth rung and a 1 in 3 chance of moving up two or more wealth rungs, according to the report.
However, growing groups of super-wealth at the top of major economies are increasingly distorting the figures for average wealth.
“Some of these findings about individual wealth will not surprise most readers, but others may be very unexpected. Many people may not recognize their own country. They may feel that their reported increase or decrease in wealth has gone unnoticed. they notice,” UBS said in the report.
This is because in many countries, the increase in average wealth overlooks a sharp fall in average wealth – suggesting greater inequality, with wealth becoming more concentrated among the richest.
Countries where average wealth is furthest from average wealth include France and Mexico, where it is twice as high. In mainland China, Hong Kong and Taiwan, it is almost three times higher, and in the US, Brazil and the United Arab Emirates, it is five times higher.
Horizontal transfer of wealth
Of the roughly $83 trillion expected to flow over the next 20 to 25 years, UBS estimates that $9 trillion will be transferred “endogenously,” or horizontally, to spouses. Because of average life expectancy and the age difference between couples, much of this large transfer of wealth is going to women.
A spouse will hold that inheritance for an average of four years before passing it on, UBS added, with the largest horizontal and vertical transfer of wealth taking place in America.
