Europe’s wealthy are falling behind – London just dropped out of the top 10 cities for very high net worth individuals

london street
London.

  • A new report looks at where the very high net worth – between $5 million to $30 million – live.
  • London fell out of Wealth-X’s top 10 ranking for the first time dating back to 2004.
  • The US dominated the ranking, with seven cities in the top 10 including the top spot – New York.
  • See more stories on Insider’s business page.

London is no longer a top-10 hub for very high net worth (VHNW) individuals.

In fact, the city’s share of VHNW individuals dropped by 16% in 2020, according to a Wealth-X’s second edition of the Very High Net Worth Handbook, which classifies VHNWs as having net worth between $5 million and $30 million.

London was knocked out of eighth place to 12th – the first time that London has been out of the top 10 since Wealth-X records dating back to 2004.

The report cites a few different factors for London’s fall down the ranks, including damages from Brexit, general pandemic economic conditions, and “poorly performing” equity markets. All was compounded by much stronger showings for the VHNW in the US and Asia.

As Insider’s Harry Robertson reported, the UK’s economy shrank by 9.9% in 2020 – the worst contraction on record as the UK fared the worst of the G7. The UK has also been particularly hard hit by the virus.

“The third major wealth region of Europe significantly underperformed its global peers, with the VHNW population declining by 7% to 623,880 individuals,” the report said.

Meanwhile, New York remained in first place, showing that a different story was unraveling across the pond. In fact, US cities represent the vast majority of the top 10 for the VHNW, with seven cities making the list. New York is holding fast to number one, and all of the US cities represented saw their VHNW populations grow.

The wealthiest Americans also saw substantial growth in 2020, with America’s billionaires adding $1.62 trillion to their wealth over the last 13 months.

On the whole, the VHNW population grew by 1.3%, amounting to a total of around 2.7 million. That’s a much smaller gain than prior years, but Wealth-X predicts a robust recovery and 1 million more VHNW individuals by 2025. Even still, the VHNW population’s total wealth rose by 1.2% to a total of $26.8 trillion.

On the other hand, a recent report from the Pew Research Center found 54 million people fell out of the global middle class, classified as those who earn about $14,600 to $29,200 a year, meaning they live on around $10 to $20 a day. A January report from Oxfam estimated that not only did 200 million to 500 million potentially fall into poverty in 2020 – it could also take a decade for the bottom to recover.

London’s drop on the VHNW list is another potential signal of its uncertain future as a financial hub, and as a home for the wealthy. In March, London saw drops in the Global Financial Centres Index, which ranks how competitive different finance hubs are. While it’s still the second top financial center, it fell over 10 points and barely ranks above Shanghai.

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Even during the pandemic, the very high net worth population grew – and it could add a million more by 2025

woman atm credit card
  • A new Wealth-X report looks at very high net worth individuals, worth between $5 million and $30 million.
  • Their ranks still grew slightly in 2020, even during a global pandemic and economic turmoil.
  • The report estimates their ranks could grow even more by 2025, and add over $11 trillion in wealth.
  • See more stories on Insider’s business page.

A new report from Wealth-X found that, even during a pandemic, the very high net worth (VHNW) population grew.

Wealth-X defines the VHNW as those with a net worth between $5 million and $30 million. The report, called Very High Net Worth Handbook 2021, looks at where they are, who they are, and how big their ranks have grown.

In 2020, their global population increased “slightly,” by 1.3%, to around 2.7 million people. In 2019, by contrast, the population saw 10% growth.

“This was a sharp slowdown from double-digit growth a year earlier, and masked large regional differences, but was a resilient performance set against the backdrop of a global pandemic, national lockdowns, international travel bans, trade disruption and the deepest contraction in world economic output for a generation,” the report said.

Their total wealth also saw a similar increase, increasing by 1.2% to a total of $26.8 trillion.

Meanwhile, their global billionaire peers tacked on an additional $4 trillion to their wealth during the pandemic. That was a 54% increase for the world’s 2,365 billionaires, bringing their cumulative wealth to $12.39 trillion – a little under half of the VHNW’s cumulative wealthy.

But the VHNW class may be in for more growth than their smaller showing in 2020. The Wealth-X report anticipates that they’ll add around 1.2 million members, for a total population of 3.8 million. Wealth-X also predicts that their wealth will increase by $11.4 trillion to $38.2 trillion.

Those in the global middle class did not fare as well. A recent report from the Pew Research Center – which classifies the middle class as those who earn about $14,600 to $29,200 a year (or live on $10 to $20 a day) – found that 54 million fell out of the global middle class.

While the number of VHNW individuals grew, so did another group: A January report from Oxfam estimated between 200 million to 500 million people may have fallen into poverty during 2020.

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There’s a wealth gap even between millionaires, and it says a lot about growing inequality

millionaires
The wealth gap even at the top shows just how bad wealth inequality is overall.

  • There’s a wealth gap among very high net worth individuals, per a new Wealth-X report.
  • Those worth $15 million to $30 million make up just 16% of that cohort, but account for double the wealth.
  • It shows just how concentrated wealth really is at the top, and how stark inequality is.
  • See more stories on Insider’s business page.

Even millionaires have a wealth gap.

One out of every 10 millionaires has a net worth between $5 to $30 million, which Wealth-X defines as “very high net worth” (VHNW) individuals in its annual report. But the wealth among this wealthy class is lopsided.

Two-thirds of the VHNW class (about 1.7 million people) comprise the cohort’s lowest wealth tier of $5 million to $10 million, per the report. But those in the upper two tiers – the $15 million to $20 million range and the $20 million to $30 million range – represent just 421,170 people, less than 16% of the VHNW population. And they hold twice as much wealth, or 32% of the total.

The VHNW class is collectively worth $26.8 trillion, accounting for a quarter of millionaires’ total global wealth of $105 trillion. Those worth $1 million to $5 million account for 40% of this total wealth, while those worth over $30 million account for 34%.

This means that across both the larger millionaire population and the VHNW cohort, vast amounts of wealth are held by an exclusive group.

The pandemic has widened wealth inequality

Pre-pandemic, wealth inequality was lurking underneath America’s surface. As Insider’s Andy Kiersz reported, there was a “two-track” economy: those who owned stocks, or were already firmly middle or high-income, were reaping the benefits of a booming economy. An increasing share of national income was going to the top 1%.

The pandemic has since exacerbated the economy’s uneven dynamics, reported Insider’s Juliana Kaplan. Inequality deepened with a K-shaped recovery, as the different tracks diverged.

The bottom of the K dragged downward, with lower-income individuals continuing to struggle with the economic fallout. The poor were financially vulnerable, with many on unemployment benefits or risking their health as an essential service worker. From June to November, about 7.8 million Americans fell below the poverty line.

Meanwhile, higher-income Americans were six times more likely to be able to work from home than lower-wage workers, according to research from the Economic Policy Institute. They were spending less and saving more, and the very richest have been growing their billions.

The wealth gap among VHNW millionaires, and millionaires overall, says a lot about the wealth gap among the rich and the poor. It shows just how concentrated wealth is at the very top.

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