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Half of world's wealth now in hands of 1% of population – report Half of world's wealth now in hands of 1% of population – report
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Global inequality is growing, with half the world’s wealth in the hands of just 1% of the population, according to a new report pointing to a rising discrepancy in prosperity in the UK. Global inequality is growing, with half the world’s wealth now in the hands of just 1% of the population, according to a new report.
The report by Credit Suisse also found that there was a slowdown in the pace of growth of the wealth of the middle classes compared with that of the very richest. Tidjane Thiam, the chief executive of the Swiss bank, said: “This has reversed the pre-crisis trend which saw the share of middle-class wealth remaining fairly stable over time.” The middle classes have been squeezed at the expense of the very rich, according to research by Swissbank Credit Suisse, which also finds for the first time that are more individuals in the middle classes in China – 109m – than the 92m in the US.
A person needs only $3,210 (£2,100) to be in the wealthiest 50% of world citizens, $68,800 to be in the top 10% and $759,900 to earn a place in the top 1%. About 3.4 billion people – 71% of all adults in the world – have wealth below $10,000. A further 1 billion – 21% of the global population – are in the $10,000-$100,000 range. “Middle class wealth has grown at a slower pace than wealth at the top end,” said Tidjane Thiam, the chief executive of Credit Suisse. “This has reversed the pre-crisis trend which saw the share of middle-class wealth remaining fairly stable over time.”
Each of the remaining 383 million adults – 8% of the population – has wealth of more than $100,000, including 34 million US dollar millionaires, who comprise less than 1% of the world’s adult population. About 123,800 individuals within this group are worth more than $50m, and 44,900 have more than $100m. The UK has the third-highest number of these ultra-high net worth individuals. The report shows that a person needs only $3,210 (£2,100) to be in the wealthiest 50% of world citizens. Some $68,800 secures a place in the top 10%, while the top 1% have more than $759,900. The report defines wealth as the value of assets including property and stock market investments but excludes debt.
About 3.4 bn people – just over 70% of the global adult population – have wealth of less than $10,000. A further 1bn – a fifth of the world population – are in the $10,000-$100,000 range.
Each of the remaining 383m adults – 8% of the population – has wealth of more than $100,000. This number includes some 34m US dollar millionaires. About 123,800 individuals of these have more than $50m, and nearly 45,000 have more than $100m. The UK has the third-highest number of these ”ultra-high net worth” individuals.
The report said: “Wealth inequality has continued to increase since 2008, with the top percentile of wealth holders now owning 50.4% of all household wealth.”The report said: “Wealth inequality has continued to increase since 2008, with the top percentile of wealth holders now owning 50.4% of all household wealth.”
It concludes that global wealth has fallen by $12.4tn so far in 2015 to $250tn – the first drop since the 2008 banking crisis. This is largely a result of the impact of the strength of the dollar, the currency that is used as the basis for Credit Suisse’s calculations. At the start of 2015, Oxfam had warned that 1% of the world’s population would own more wealth than the other 99% by next year. Mark Goldring, Oxfam GB’s chief executive, said: “The fact it has happened a year early – just weeks after world leaders agreed a global goal to reduce inequality – shows just how urgently world leaders need to tackle this problem.
It also finds that for the first time, there are more individuals in the middle classes in China – 109 million – than the US, which has traditionally had more people who fit this definition than any other country. This year, 92 million in the US are ranked as being in the middle classes. “This is the latest evidence that extreme inequality is out of control. Are we really happy to live in a world where the top 1% own half the wealth and the poorest half own just 1%?”
A year ago, the Credit Suisse Global Wealth Report had singled out the UK as the only country in the G7 where inequality had risen this century. In this year’s report, the authors say there has been a trend of upward mobility in the UK along with increasing inequality over the past 15 years. The Credit Suisse report concludes that global wealth has fallen by $12.4tn so far in 2015 - to $250tn – the first drop since the 2008 banking crisis. This is largely a result of the strength of the dollar, the currency used for Credit Suisse’s calculations.
The estimates are for the end of June 2015, when Chinese stock prices had fallen 20% from the peak after soaring by more than 150% between June 2014 and mid June 2015. The report was published at the end of September, by which time the Chinese stock market had fallen a further 25%.
A year ago, the the UK had been singled out as the only country in the G7 where inequality had risen this century. In this year’s report, the authors say:
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The report says: “[In the UK] wealth inequality has risen since 2000, as the gap in wealth per adult between the lower segment and rest of the population has increased.” “[In the UK] wealth inequality has risen since 2000, as the gap in wealth per adult between the lower segment and rest of the population has increased.”
The UK is fourth in the world for median wealth – which strips out the impact of those at the highest and lowest end of the wealth league – at $126,500, down 13% on a year earlier. The UK is fourth in the world for median wealth – which strips out the impact of those at the highest and lowest end of the wealth league – at $126,500 (£83,000) per person, down 13% on a year earlier.
But there are rising numbers of wealthy individuals in the UK, which is home to the world’s second-largest number of dollar millionaires after the US, with 2.36 million, 68,000 more than the year before. Another 903,000 individuals joined the millionaire club in the US, taking the total there to more than 15 million. However, while the global millionaire club lost 2.4 million members, Credit Suisse forecast that its numbers would rise to 49.3 million over the next five years. The Credit Suisse survey calculates that there are now 2.4 million dollar millionaires in the UK , up 68,000 on a year earlier. In the US the number of millionaires is now more than 15m – up 903,000.
The UK was one of only three countries, along with the US and China, to record a rise in household wealth on 2014. It also leapfrogged Germany in the number of people with more than $50m of wealth, with 400 more than 2014 and a total of 5,400. This put the UK in third place, behind the US with 61,300 of the world’s wealthiest and China with 9,600. The UK was one of only three countries, along with the US and China, to record a rise in household wealth in 2014. It also leapfrogged Germany in the number of people with more than $50m, with 400 more than 2014 and a total of 5,400. This put the UK in third place, behind the US with 61,300 of the world’s wealthiest and China with 9,600.
This year’s report focuses on the middle classes, as defined by personal wealth rather than profession, and finds that this group in North America has less than average wealth. A middle-class adult in the US is defined as having wealth between $50,000 and $500,000 and used as the benchmark for the study. The American middle classes are the only ones in the survey to have less than average wealth. This year’s report focuses on the middle classes, as defined by personal wealth rather than profession. It says 14% of adults worldwide are middle class, with $50,000-$500,000 of assets.
The report said: “Our results indicate that 664 million adults belong to the global middle class in 2015, equivalent to 14% of the total adult population. China now has the largest number of middle-class adults by a wide margin – 109 million compared to 92 million in the United States (although this ranking is reversed when those above the middle-class upper threshold are added). But Markus Stierli, of the Credit Suisse Research Institute, said: “From 2008 onwards, wealth growth has not allowed middle-class numbers to keep pace with population growth in the developing world. Furthermore, the distribution of wealth gains has shifted in favour of those at higher wealth levels. These two factors have combined to produce a decline in the share of middle-class wealth.”
“Eleven other countries have more than 10 million middle-class citizens, ranging from Japan with 62 million, through France, Italy, Germany, India, Spain and the United Kingdom, with 20–30 million, and Australia, Brazil, Canada and Korea, with 10–17 million members each.” .
Credit Suisse downgraded its forecast for household wealth over the next five years, which it expects to rise to $345tn in June 2020. This is an annual growth rate of 6.6%, less than the 7% forecast last year.