UK suffers second highest fall in wealth of any major economy in 2024
Average wealth in Britain fell the second most of any major economy in 2024, according to a closely followed global study, piling fresh scrutiny on the country’s battle to stem an exodus of its wealthiest residents and kickstart its flagging economy.
According to UBS’s annual Wealth Report, mean household wealth in Britain fell 3.6 per cent over the course of last year, reversing a trend of healthy growth which has seen it swell by over six per cent since the start of the decade.
The only country that eclipsed the UK households’ wealth drop was crisis-ridden Turkey, which is in the grips of a self-inflicted economic crisis that in 2024 saw inflation top 75 per cent and interest rates reach an eye-watering 50 per cent. Average wealth in the Eurasian economy fell over 14 per cent in real terms, the study said.
Michel Frey, head UK high net worth (HNW) in UBS’s wealth management am, attributed the UK’s fall to a combination of the languid performance of the London stock market and a paucity of gains in house prices.
“Average real-term wealth per adult in the United Kingdom fell in 2024 because living-cost pressures and rising interest rates moved faster than either house prices or most financial markets. Naturally, this dented people’s ability to build or retain wealth,” he told City PM.
Median household assets in the UK grew by over five per cent, however, meaning it was the top end of the UK’s wealth distribution that suffered major dents to their net worth, Frey added.
American wealth grows faster than other countries
The same paper found wealth in the US to have ballooned especially quickly, with the value of households’ assets growing 11 per cent in the Americas, compared to 4.6 per cent worldwide.
The growth helped the world’s richest country to gain more than 1,000 millionaires a day over a year when the S&P 500 climbed over 25 per cent and its economy grew 2.8 per cent, bucking the stagnation that struck most other developed economies.
Frey highlighted the stark difference between the performance of the US’s blue-chip index compared with London’s FTSE 100 as a key driver of the divide between the two countries, saying “muted gains” in London equities dragged on households’ wealth.
The FTSE 100 grew just 5.7 per cent over the course of 2024, considerably less than New York’s blue-chip index, while property prices in Britain grew 4.7 per cent.
“Where the UK does lag is in the breadth of its public equity market and the depth of domestic risk-capital formation,” he said. “Revitalising the London Stock Exchange and encouraging more high-growth companies to list at home would go a long way to anchoring future wealth creation here.”
UBS’s paper reflects several other pieces of landmark research into the falling amount of wealth in Britain as some of its wealthiest residents relocate to lower tax jurisdictions.
In December, a Henley and Partners study estimated that 10,800 dollar millionaires had left Britain in 2024, with departures expedited by the government’s decision to scrap the non-dom status along with other tax rises in its Autumn Budget.