Stag­ger­ing di­vide

A NEW RE­PORT HAS FOUND THE WORLD’S RICH­EST 1 PER CENT OF PEO­PLE NOW OWN HALF OF GLOBAL WEALTH AND MIL­LEN­NI­ALS ARE AT A DIS­AD­VAN­TAGE

The Gulf Today - Panorama - - Contents - by Ben Ken­tish

The rich­est 1 per cent of peo­ple in the world now own half of the planet’s wealth, ac­cord­ing to a new re­port that high­lights breath­tak­ing lev­els of global in­equal­ity.

The study re­veals how the su­per-rich have prof­ited from the af­ter­math of the 2008 global fi­nan­cial cri­sis, see­ing their pro­por­tion of the world’s wealth in­crease from 42.5 per cent in the midst of the cri­sis to 50.1 per cent now.

Ac­cord­ing to the Credit Suisse Global Wealth Re­port, the top 1 per cent are now worth a to­tal of £106 tril­lion (Dh­s515t) — around eight times more than the size of the US econ­omy.

The wealth­i­est 10 per cent of peo­ple, mean­while, own 87.8 per cent of global wealth.

“The down­ward trend re­versed after 2008 and the share of the top 1 per cent has been on an up­ward path ever since, pass­ing the 2000 level in 2013 and achiev­ing new peaks ev­ery year there­after,” the re­port says.

The gap­ing in­equal­ity has re­sulted in a huge rise in the num­ber of mil­lion­aires and ul­tra-high­net-worth in­di­vid­u­als (those worth more than $30 mil­lion (Dh­s110m). Since 2000, the num­ber of mil­lion­aires in the world has risen by 170 per cent, to 36 mil­lion, while the num­ber of ul­tra-high-net­worth in­di­vid­u­als has in­creased five times over.

The UK has the third high­est num­ber of mil­lion­aires — 6 per cent of the to­tal.

The re­port states: “In­creas­ing in­equal­ity can boost the speed at which new mil­lion­aires are cre­ated.”

At the other ex­treme, the poor­est half of the world’s pop­u­la­tion — 3.5 bil­lion peo­ple — own just 2.7 per cent of global wealth, which grew faster in the last year than at any time since 2010, reach­ing a to­tal of $280t (Dhs1.03 quadrillion).

Char­i­ties said the find­ings high­lighted the need for ac­tion from po­lit­i­cal lead­ers both in the UK and in­ter­na­tion­ally.

Katy Chakrabortty, Ox­fam’s head of advocacy, said: “In the UK, the wealth­i­est 1 per cent have seen their share in­crease to nearly a quar­ter of all the coun­try’s wealth, while the poor­est half have less than 5 per cent.

“This di­vide mat­ters hugely at a time when mil­lions of peo­ple across the UK face a daily strug­gle to make ends meet and the num­bers living in poverty are the high­est for al­most 20 years.

“The re­cent Par­adise Pa­pers rev­e­la­tions laid bare one of the main driv­ers of in­equal­ity — tax-dodg­ing by rich in­di­vid­u­als and multi­na­tion­als. Gov­ern­ments should act to tackle ex­treme in­equal­ity that is un­der­min­ing economies around the world, di­vid­ing so­ci­eties and mak­ing it harder than ever for the poor­est to im­prove their lives.

Ac­cord­ing to the re­port, growth in Europe was the sec­ond high­est of all re­gions, but the UK was sin­gled out as hav­ing an “un­cer­tain” out­look be­cause of Brexit.

An­a­lysts said the im­pact of leav­ing the EU on Bri­tish mar­kets and the value of the pound means UK wealth is likely to fall by 0.9 per cent over the next five years.

In con­trast, many Euro­pean coun­tries are grow­ing rapidly: Ger­many, France, Italy and Spain ac­counted for a fifth of all global growth in the past year.

The study also found that mil­len­ni­als face a sig­nif­i­cant dis­ad­van­tage com­pared to older gen­er­a­tions.

In­tro­duc­ing the re­port, Urs Rohner, chair­man of the Credit Suisse board of di­rec­tors, said: “Those with low wealth tend to be dis­pro­por­tion­ately found among the younger age groups, who have had lit­tle chance to ac­cu­mu­late as­sets, but we find that mil­len­ni­als face par­tic­u­larly chal­leng­ing cir­cum­stances com­pared with other gen­er­a­tions.

“High un­em­ploy­ment, tighter mort­gage rules, grow­ing house prices, in­creased in­come in­equal­ity, less ac­cess to pen­sions and lower in­come mo­bil­ity have dealt se­ri­ous blows to young work­ers and savers and hold back wealth ac­cu­mu­la­tion by the mil­len­ni­als in many coun­tries.

“With the baby boomers oc­cu­py­ing most of the top jobs and much of the hous­ing, mil­len­ni­als are do­ing less well than their par­ents at the same age, es­pe­cially in re­la­tion to in­come, home­own­er­ship and other di­men­sions of well­be­ing as­sessed in this re­port.”

Only a small pro­por­tion of high-achiev­ing mil­len­ni­als will be able to over­come the “mil­len­nial dis­ad­van­tage,” he added.

Since 2000, the num­ber of mil­lion­aires in the world has risen by 170 per cent.

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