Britain is the only country in the G7 group of leading economies where inequality has increased this century, according to a report published on Tuesday. The amount of the country’s wealth controlled by the richest 10% increased to 54.1% this year, up from 51.5% in 2000, according to the annual Credit Suisse global wealth report. The increase in inequality has coincided with a boom in the number of rich and super-rich people in Britain. There are now 44 dollar billionaires in Britain, compared with eight at the start of the century, while the number of people whose net worth is at least $50m (£31m) almost quadrupled to 4,660. As the rich have got richer, low and middle-income households have been squeezed by falling real incomes caused by years of rising household bills and lack of wage increases. Oxfam’s head of inequality, Emma Seery, said: “In the UK, successive governments have failed to get to grips with rising inequality. This report shows that those least able to afford it have paid the price of the financial crisis whilst more wealth has flooded into the coffers of the very richest.” The richest 10% of the UK population have continued to get wealthier since the financial crisis – their share of the wealth was 52% in 2007. The report says the rich have become wealthier because financial assets such as shares have risen in value. Those assets rose strongly as investors looked for higher returns with interest rates at all-time lows. Anthony Shorrocks, who helped to write the report, said the recovery of London, its soaring property prices and its position as the UK’s financial powerhouse was a factor in Britain’s rising inequality. In other European countries such as Germany and Italy, he said, “they don’t have a city that dominates in quite the same way”. He added: “Even in France I don’t think Paris has the same effect as London does in Britain. [Britain’s rising inequality] could well reflect the regional divide between the south-east and the rest of the country.” Britain now has two million dollar millionaires, if the value of equity in houses is included, up by almost a third since last year. The number has been boosted by rising property and share prices and the pound’s increase in value against the dollar. Globally, the report says the richest 1% are getting wealthier and now own more than 48% of the world’s wealth. A person needs $3,650 (£2,300), again including the value of any equity in property, to be among the wealthiest half of the world’s population. Those with more than $77,000 (£48,000) are among the top 10%. To be among the top 1%, an individual would need assets of $798,000. “Taken together, the bottom half of the global population own less than 1% of total wealth. In sharp contrast, the richest decile hold 87% of the world’s wealth, and the top percentile alone account for 48.2% of global assets,” says the report, now in its fifth year. Oxfam’s Seery said: “These figures give more evidence that inequality is extreme and growing, and that economic recovery following the financial crisis has been skewed in favour of the wealthiest. In poor countries, rising inequality means the difference between children getting the chance to go to school and sick people getting life saving medicines.” Total global wealth is calculated to have grown to $263tn, more than twice the $117tn total in 2000, and up $20.1tn in a year – – the fastest growth since 2007. The total has risen every year since 2008 and is now 20% above its pre-crisis peak, the report says. Michael O’Sullivan, Credit Suisse’s chief investment officer for UK, Europe, Middle East and Africa, said the global picture had not changed much from 10 years ago and Britain and most European countries were in the “medium inequality” category where the richest 10% owned 50-60% of wealth. “From that point of view the argument is more balanced. It’s tempting to see the world as living in a situation of gross wealth inequality but in most of Europe that isn’t the case,” he said. The authors warned that rising inequality could indicate a recession was on the way, with the global wealth-to-income ratio hitting a peak. “The ratio is now at a recent record high level of 6.5 (the average wealth is 6.5 x income), matched previously only during the Great Depression. This is a worrying signal given that abnormally high wealth-income ratios have always signalled recession in the past.” China now has more people in the top 10% of global wealth holders than any other country except for the US and Japan, having overtaken France, Germany, Italy and the United Kingdom.
Posted on: Wed, 15 Oct 2014 10:41:17 +0000