The World’s Millionaires Are Booming, But Not in the UK: A Look at UBS’s 2024 Global Wealth Report
The world’s wealth continues to grow, with the number of millionaires expected to rise in 52 out of 56 economies surveyed by UBS over the next five years. While this global trend is a positive sign, the UK is facing a stark contrast, with an estimated 17% decline in its millionaire population. This unexpected dip highlights the complex dynamics of wealth distribution and raises concerns about economic disparity, even as global wealth surges.
Key Takeaways:
- Global millionaire growth: The number of millionaires is set to rise significantly in many economies, led by Taiwan (47%), Turkey (43%), Kazakhstan (37%), and Indonesia (32%).
- UK’s declining wealth: Despite being home to the third-highest number of dollar millionaires globally, the UK is expected to see a significant drop in its millionaire population, driven by various factors including sanctions against Russia, capital outflows, and changes to tax regimes.
- Wealth inequality: While global wealth mobility is expected to improve overall, the report highlights growing clusters of wealth at the top, skewing average wealth figures and potentially exacerbating inequality.
- Horizontal wealth transfer: The report identifies a significant trend of wealth moving "sideways" to spouses, particularly in the Americas, adding another dimension to the existing generational wealth transfer.
The UK’s Troubling Trend:
UBS’s chief economist, Paul Donovan, attributes the UK’s anticipated decline to a combination of factors. The sanctions imposed on Russia have impacted the country’s appeal as a safe haven for wealthy Russians, leading to capital outflows. Additionally, the U.K.’s non-domiciled status tax regime changes, initiated by the Conservative government, have had a noticeable, albeit not substantial, impact.
Donovan, however, emphasizes that the UK’s current millionaire population is "far more … than it deserves to have as an economy". This suggests that the decline might be a correction, as wealth seeks more favorable environments, particularly in low-tax locations like Dubai and Singapore.
The Global Picture: Rising Wealth, Shifting Landscapes:
Despite the UK’s downturn, global wealth is on an upward trajectory, with a 4.2% growth in 2023 after a 3% decline in 2022. The EMEA region, encompassing Europe, the Middle East, and Africa, led the recovery with a 4.8% growth rate.
The report sheds light on the complex relationship between wealth growth and inequality. While overall wealth mobility is expected to improve over the next decade, the concentration of wealth at the top is growing, creating a stark disparity in wealth distribution across several economies.
This disparity is evident in the significant gap between average wealth and median wealth in countries like France, Mexico, mainland China, Hong Kong, Taiwan, the US, Brazil, and the UAE. This gap highlights the increasing concentration of wealth within the hands of the elite, often leaving behind a vast majority with lower levels of wealth.
A New Chapter in Wealth Transfer:
Beyond the generational wealth transfer that has been discussed for years, the UBS report introduces the concept of "horizontal wealth transfer", highlighting the significant amount of wealth set to be passed between spouses.
The report estimates that $9 trillion of the $83 trillion expected to be transferred over the next 20-25 years will be transferred intra-generationally, or horizontally, to spouses. This dynamic is mainly attributed to longer life expectancies and age differences between couples, resulting in a significant portion of inherited wealth being transferred to women.
The Verdict:
UBS’s 2024 Global Wealth Report provides a compelling snapshot of the evolving global wealth landscape, revealing both positive and concerning trends. The report underlines the growing importance of navigating the complexities of wealth distribution and inequality, particularly as the global economy undergoes significant structural shifts.
While the rise in millionaires worldwide is a positive indicator of economic growth, the stark decline in the UK highlights the fragility of wealth dynamics and underscores the importance of fostering inclusive economic policies that benefit a wider segment of society.
Furthermore, the report’s focus on horizontal wealth transfer introduces a new dimension to the analysis of wealth transfer, emphasizing the need to acknowledge the intricate nuances of wealth distribution and its implications for gender equality and economic development.
