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European Wealth Report: The pandemic has increased wealth concentration

January 7, 2022

reading time: 8 minutes

by MAG/NET editorial team

European Wealth Report

A new study by a Swiss interdisciplinary thinktank takes a close look at the impact of the Covid pandemic on net wealth in Europe. 

The main findings of the recently published Redesigning Financial Services (RFS) study show that, in 2020, European private net wealth has grown faster (+3.9%) than the European GDP (-6.4%). Private assets in Europe reached an all-time high of EUR 69 trillion in 2020. This means that wealth in Europe is increasingly concentrated amongst an increasingly small number of people, thereby increasing economic inequalities.

Below you find the most important questions the study answers. Please note that the study defines a household’s net wealth not only by the asset prices of a household, but also by the liabilities a household carries, including e.g. real estate.

Which European countries are the wealthiest today?

Core countries make up over 70% of Europe’s total net wealth, including Germany (EUR 16.4 trillion), France (EUR 12.6 trillion), the UK (EUR 10 trillion, and Italy (EUR 10 trillion).

Which European country has seen the largest average wealth increase over the last 10 years?

This is Switzerland, adding nearly EUR 2 trillion in wealth over the previous ten years, representing a doubling in the net wealth of the period.

Is European wealth increasingly concentrated?

Yes. The wealthiest 10% of European households make up no less than 51% of the total net European wealth. The wealthiest 1% of Europeans occupy 19% of total European wealth. This trend is even expected to continue, and to pose increasing issues for society and the economy. This concentration of wealth, however, also makes the European market more attractive for private banks

Which European country has the most millionaires?

Germany, the UK, France, and Italy have the most millionaires in absolute terms. In Germany, there are 2.9 million millionaires, 2.5 million in the UK, 2.5 million in France, and in Italy 1.5 million. The countries with the highest density of millionaires include Switzerland (14.1%) and the Netherlands (7.1%).

How have the wealthiest Europeans made their wealth?

Contrary to the wealthiest in USA, the wealthiest Europeans do not derive their wealth from technology companies. Instead, most derive their wealth from luxury goods and retail businesses.

Is the European trend of an increase in inequality expected to continue in the future? In other words, are the wealthy getting even wealthier and the poor even poorer?

This is very likely. The probability of a further increase in inequality is due to three main reasons:

  • Firstly, due to the pandemic, European economic growth will probably remain relatively low in the future. In 2020, European GDP contracted by 6.4%.
    Wealth, on the other hand, generally grows faster compared to the economy. This means that European families owning capital will very probably retain and increase their wealth, while the ones in possession of little wealth will have little chance to improve their lot.
  • Secondly, the pandemic has already increased inequalities in most countries, making it even harder for less wealthy families to get a larger share of European wealth.
  • Thirdly, if one assumes the rate of capital returns to remain close to its 200-year average of 4% to 5% per year, it stands to reason that the concentration of European wealth is likely to increase persistently in the years to come.

You can find more details in the complete study here.

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