The global wealth gap widened during the Covid pandemic, swelling the ranks of the world’s millionaires by 5.2 million as the rich took advantage of soaring stock and house prices.
The figures, detailed in Credit Suisse’s annual Global Wealth Report, show how emergency interest rate cuts and government stimulus have often benefited those least in need of state aid. , helping their assets to appreciate despite the economic downturn.
Dollar millionaires now represent over 1% of the world’s population for the first time in history. Figures show 56.1 million people had assets worth more than $ 1million (£ 720million) in 2020.
Contrasting fortunes at the top and bottom were highlighted, as those who already had lower incomes suffered job losses and lower incomes due to the economic downturn.
“The increase in wealth inequalities was probably not caused by the pandemic itself, nor its direct economic impacts, but rather was a consequence of actions taken to mitigate its impact, mainly lower interest rates.” , said the report’s authors.
Actions to offset the effects of the Covid-19 pandemic have contributed to a dramatic increase in wealth inequalities and have led to the largest wealth gap since 2016.
The United States accounted for nearly a third of the 5.2 million new millionaires worldwide last year, adding 1.7 million to the country’s total, now at 22 million. Germany followed, adding an additional 633,000 millionaires. The UK – sixth in the ranking of countries with most new rich people – added 258,000 millionaires, so the country is now 2.5 million people with assets worth more than one million of dollars.
Another 41,420 adults also joined the group of so-called very wealthy individuals who each raised assets worth over $ 50 million. That’s a 24% jump from 2019, the fastest annual growth rate in 17 years, and brings the total number of super-rich people to 215,030.
The impact of the pandemic on household wealth, especially for the poorest, has been worst in countries where governments have failed to compensate for wages lost during forced economic shutdowns.
In high-income countries such as the UK, emergency benefits such as the leave scheme have helped soften the blow of job cuts or declining business incomes. But those who could not access emergency aid were hit hardest and forced to dip into their savings or take on more debt. The impact was particularly acute for vulnerable groups, including minorities, young people and women, who worked in hard-hit sectors such as retail and hospitality, the report said.
Meanwhile, the wealthiest, already sitting in large equity and property portfolios, have been relatively untouched by the economic downturn. Stock prices, which collapsed in the first half of 2020, rallied in the closing months of the year, increasing the wealth of men, middle-aged people and the wealthiest people in general.
Homeowners in most markets have also benefited from rising house prices, which rose on average 5.6% in 2020, according to a separate report from the Knight Frank Global House Price Index which tracks the prices in 56 countries. It was the fastest growth rate in three years.
Anthony Shorrocks, economist at the University of Manchester and member of Credit Suisse Authors of the report, said the rise in asset prices did not reflect the challenges that most countries around the world felt during the pandemic.
“There is a kind of disconnect between what happened in the economies at large – which experienced serious problems and required a lot of government intervention – and what happened to household wealth, which seems to have continued as if nothing had happened, ”he said.
In total, global wealth increased 7.4% in 2020 to reach $ 418.3 billion in 2020, with gains largely attributed to growth in the United States, Europe and China, while global wealth in Latin America and India declined.
Global wealth is expected to grow a further 39% over the next five years to reach $ 583 billion by 2025, while the number of millionaires is expected to increase by almost 50% to 84 million people. The group rich enough to be considered ultra-high net worth is also expected to grow by almost 60% to reach 344,000 people.