the number of millionaires around the world has risen to 20 million people. It has not been the case that new fortunes have been made everywhere, however, with the UK one of only three countries to see its high net worth individual population shrink last year.
The number of high net worth individuals (HNWI) is growing around the world. According to one recent study, for example, the number of households with income of more than $100,000 is likely to grow 45% by 2025, with the world hosting 663,483 HNWI populations by then. While the number of wealthy people is growing though, it is also concentrating in a number of areas. North America will host around one-third of the world’s HNWIs in 2025, twice as many as in Asia Pacific, despite its much smaller population.
A new study from Capgemini has further supported this hypothesis, with the finding that while the number of millionaires has exploded in the last year, they generally reside in the same old places. Defining a HNWI as someone with assets of $1 million or more, the consultancy found the UHNWI population grew 6.3% in 2020, surpassing the 20-million mark, while HNWI wealth grew 7.6% in 2020, nearly reaching $80 trillion. The biggest beneficiary of this growth was the world’s largest economy, though. Boosted by rising equity markets and government stimulus, North America surpassed Asia-Pacific, to become the 2020 leader in both HNWI population and wealth.
At the same time, North America also has a disproportionately large amount of wealth horded among its HNWIs. As of 2016, the region hosted 579 million people – 7 million of whom are now millionaires, and have a combined worth of $24.3 trillion, according to the report. However, Africa, which had a growing population of more than 1.2 billion in 2016 now hosts around 200,000 millionaire – a figure which has scarcely changed since 2014 – while their collective net worth is around $1.7 trillion.
While the saying goes that a rising tide lifts all boats, meanwhile, the opposite currently seems to be the case in terms of global wealth. While there are more people who are HNWIs now, the growth of people in extreme poverty has grown much faster. According to the biennial Poverty and Shared Prosperity Report, extreme poverty (people living on less than $1.90 a day) was likely to affect as much as 9.4% of the world’s population in 2020, a regression from the estimated rate of 9.2% in 2017. Even in countries where extreme poverty is rare, the share of wealth is still getting more extreme.
The US, Japan, Germany and China host 62% of the world’s HNWI population, up from 58% in 2012, suggesting that wealth is rapidly consolidating in certain points around the world, while the US remains the largest HNWI population, with 6.5 million millionaires. This represents growth of several-hundred-thousand over the last year, but in the same period nearly 8 million US residents fell into poverty over the summer of 2020, according to a study from the University of Notre Dame, assessing the effects of the coronavirus pandemic on the number of people living under the poverty line. This represents the largest jump in a single year stretching back 60 years to when the government first began tracking poverty.
The UK meanwhile seems to be one of the biggest losers from this process. It saw its number of HNWIs fall by 18 from 2019 to 2020, thanks to the perfect storm of Brexit’s culmination and the outbreak of Covid-19 resulting in the country’s worst recession since 1709, during which GDP tumbled by 9.9%. This made the UK one of only three nations considered by Capgemini to forfeit HNWIs, alongside Kuwait and Brazil.
In spite of this, London is still ranked highest for HNWIs, in terms of the lifestyle the diverse and innovative metropolis provides. It shared top spot with New York in terms of the city’s policies toward UHNWIs, though it ranked third in terms of its investment potential, beneath both New York and Tokyo, according to a recent poll by Knight Frank.
The drop in millionaires in the UK is the least of the nation’s worries though. Almost 700,000 people in the UK, including 120,000 children, fell into poverty as a result of the Covid-19 economic crisis, according to the Legatum Institute. Overall, the pandemic saw the total number of people in the UK living in poverty to more than 15 million, or 23% of the population.