The U.K. Lost 15% of Its Millionaires Because of BrexitBy and
Number of dollar millionaires drops as pound, stocks rattled
Japan posted a 19% surge in wealth on currency effect
The number of dollar millionaires in the U.K. slumped 15 percent as the country’s vote to leave the European Union rattled the pound and the stock market, according to a report by Credit Suisse Group AG.
Household wealth in the U.K. declined by $1.5 trillion, or 10 percent, in the 12 months through June 2016 as “a direct consequence” of the Brexit vote, the No. 2 Swiss bank said in its annual global wealth report published on Tuesday.
“The U.K. had a tumultuous end to 2015-2016, with sharp declines in the exchange rate and the stock market following the vote to leave the EU,” Credit Suisse said in the report. “The outlook is very uncertain, both for the economy and household wealth.”
The U.K.’s $14 trillion in private wealth is spread around 49 million adults, of which almost 5 percent have $1 million or more. The surprise result of the June 23 vote helped fuel a 15 percent decline in the pound this year and sent the local stock market to its biggest one-day drop since the 2008 financial crisis. While equities have rebounded since then, the country is facing political and economic uncertainty over the terms on which the split will take place.
“The pound will continue to act as the shock absorber for Brexit,” Michael O’Sullivan, chief investment officer for Credit Suisse’s international wealth-management unit, said in a telephone interview. “If you just factor in what’s happening with sterling and the property market, that means that when we get to this time next year, U.K. wealth will be down even more.”
The decline in U.K. wealth would be closer to $2 trillion if the figure was updated today, O’Sullivan told reporters at an earlier presentation in Zurich.
Japan was the main winner during the 12-month period, with household wealth in the world’s third-largest economy surging 19 percent to $24 trillion, buoyed by the appreciation of the yen versus the dollar. Wealth in the U.S. climbed for the eighth straight year, to $85 trillion, according to the report.
Japan, the U.S. and Germany accounted for the largest numbers of new millionaires as the number of people worldwide with $1 million or more rose by 596,000 to 32.9 million. The countries expected to post the fastest growth rates of millionaires in the next five years are China -- 73 percent -- as well as India, Australia and Canada, according to the report.
Worldwide wealth advanced 1.4 percent to $256 trillion in the 12 months through June, reflecting lackluster economic growth, and is expected to reach $334 trillion by 2021, the report showed.