People walk through a mall in Manhattan on July 5, 2024 in New York City.
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LONDON — The number of millionaires globally is expected to continue to rise over the next five years — with the UK being a glaring exception, according to UBS’s Global Wealth Report 2024.
The number of adults with assets of $1 million or more is expected to increase in 52 of the 56 developed and developing economies surveyed between 2023 and 2028. Leading the increase is tech powerhouse Taiwan, where the number of millionaires is expected to increase by 47% thanks to a booming microchip industry and immigration by wealthy foreigners.
This is followed by Türkiye (43%), Kazakhstan (37%), Indonesia (32%) and Japan (28%). The two global hubs for millionaires are the United States and mainland China, which are expected to see their numbers increase by 16% and 8%, respectively.
However, the number of millionaires is forecast to fall by 17% in the UK.
Paul Donovan, chief economist at UBS Global Wealth Management, said the UK now had the third highest number of dollar millionaires, which he called “far more… than the UK economy deserves”.
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 “organic” growth, while the UK’s growth will be offset by capital outflows due to a variety of “push and pull” factors.
This is partly due to natural shifts in wealth distribution as the world economy undergoes structural changes and capital moves around the world, he said at a press conference.
Other factors driving the decline in millionaires include Britain’s imposition of sanctions on Russia – while wealthy Russians have long looked to London as a place to store their wealth – and “non-native millionaires” continually looking to low-tax locations such as Dubai and Singapore, Donovan added.
He did not cite Britain’s newly elected center-left Labour Party as a contributing factor to the forecast. Instead, he noted that changes to the UK’s so-called “non-resident” tax regimeinitiated by the newly ousted Conservative government, had a “small, insignificant” impact.
Meanwhile, the report said the number of US dollar millionaires in Russia increased by 21%. Donovan said that was partly due to currency fluctuations, as well as recent trends in the commodities and energy markets that have favored owners of those businesses.
Another country where the number of dollar millionaires is expected to decline is the Netherlands, where the number of wealthy individuals is estimated to fall by 4%.
Rising inequality?
UBS sees global wealth growth recovering in 2023, rising 4.2% after a 3% decline in 2022. The recovery is largely led by the EMEA (Europe, Middle East and Africa) region, which is up 4.8%, compared to 4.4% in Asia-Pacific and 3.5% in the Americas.
Meanwhile, the report paints a mixed picture of how wealth inequality is growing. Between 2000 and 2030, UBS said wealth mobility – a person’s ability to move up the wealth ladder over their lifetime – will improve overall.
The report found that people who start in the lowest income bracket have a 60% chance of moving up at least one income bracket and a one-third chance of moving up two or more income brackets.
However, the rise of the wealthy in major economies is distorting figures on average wealth.
“Some of these personal wealth findings will not surprise most readers, but others may be very surprising. Many may not recognise their own country. They may feel like the reported growth or decline in wealth has passed without them noticing,” UBS said in the report.
The reason is that in many countries, the rise in average wealth has overlooked a sharp fall in median wealth – implying rising inequality, as wealth becomes more concentrated in the hands of the richest.
The countries with the most unequal median wealth include France and Mexico, where median wealth is more than double. In mainland China, Hong Kong and Taiwan, median wealth is nearly three times higher, and in the United States, Brazil and the United Arab Emirates, median wealth is five times higher.
Horizontal transfer of assets
While great transfer of wealth between generations In a long-debated move, UBS identified in a report this year that wealth is not only going down but also trending “sideways” for married couples.
Of the roughly $83 trillion expected to be transferred over the next 20 to 25 years, UBS estimates that $9 trillion will be transferred “intragenerationally,” or horizontally, to spouses. Given average life expectancies and the age gap between couples, more than 10 percent of the large wealth transfers will go to women.
Typically, spouses will hold onto this inheritance for an average of four years before passing it on to their children, with the largest horizontal and vertical transfers of wealth occurring in the Americas, UBS added.
