Britain to suffer world’s biggest exodus of millionaires as Labour takes power

Britain is poised to suffer the world’s worst exodus of millionaires amid fears Labour will increase wealth taxes.

The number of UK millionaires is expected to shrink by 17pc between 2023 and 2028, according to Swiss investment bank UBS, which published its research just days after Sir Keir Starmer’s landslide victory. 

Its annual Global Wealth Report revealed that around 519,000 millionaires are expected to quit the UK over the period, which is the most pronounced drop of all the countries it tracks. 

This will take the country’s total tally to 2.5 million. 

The Netherlands is the only other country expected to post a decline, although its drop is much smaller at 4pc. 

By contrast, countries like Taiwan, Indonesia and Thailand are among those with the sharpest rises. 

The projection comes as Britain’s high earners fear a series of new wealth taxes under Labour, alongside a renewed crackdown on non-doms. 

However, Paul Donovan, chief economist at UBS Global, said the reasons for the drop went beyond just higher taxes.

Mr Donovan said: “There is a case of push and pull. Sanctions against Russia have caused a shift in population over time in this particular group. The non-dom status shift that the Conservative government implemented has had a small effect.”

He added: “And the non-indigenous millionaire population, which is constantly shifting, will be looking for low-tax locations all of the time. That is a function of pull factors in other countries like Dubai or Singapore.” 

Mr Donovan also highlighted that the UK has an outsized number of millionaires, ranking only behind the US and China.

Japan, France and Germany are projected to overtake the UK by 2028. 

The report also found that Gen X and millennials are to inherit a record $74 trillion (£58 trillion) from their parents and grandparents over the next two decades.

The bank’s annual Wealth Report said an estimated record $83 trillion will be passed on over the next 20 to 25 years, with the vast majority of this being handed down to younger generations. 

It comes as baby boomers – those born between 1946 and 1964 and forming the wealthiest and one of the largest generations – start to retire and enter old age.  

UBS noted that a large chunk of this wealth could be transferred within the next decade, with people over the age of 75 holding nearly a fifth of the world’s overall wealth and their life expectancy averaging 82 to 86 years.

This means much of it will initially go to Gen X, who are currently aged 44 to 59.

Mr Donovan said: “For the first half of that [20-25 year] period, it is going to be Gen X that is going to benefit from the wealth transfer by and large. Towards the end of a 20-year period you will start to see some transfers from Gen X to millennials and Gen Zs.” 

Of the total $83 trillion expected to be passed on, UBS said $9 trillion (£7 trillion) will be passed intra-generationally, mainly to spouses, making up more than 10pc. 

This means women will receive a significant wealth boost in the later years of their lives as they tend to live longer and there is often an age gap in marriages. 

The spouse receiving the inheritance will therefore typically hold the wealth for an average of four years before passing it on, the bank noted in its Global Wealth Report for 2024. 

Mr Donovan said: “Right now at UBS, 45pc of global wealth management clients were women. The number of female clients at UBS has grown 5pc between 2020 and 2023. That is a change which may well continue as we see these transfers of wealth shifting ownership in the future.”

The largest transfer of the total wealth transfer will take place in the Americas, accounting for $50.6 trillion, while another $21.4 trillion will be passed down in Europe, the Middle East, and Africa. 

In Asia–Pacific, some $11.5 trillion will be inherited. This reflects that the average wealth for each adult is lower than in the other regions. 

This trend comes as population projections suggest large parts of Asia will age rapidly, with China’s over-70s set to roughly treble by 2060 to nearly 350 million.  

The average age of a person passing on wealth will be 84 years old, UBS said, and the recipient 59 years old. The oldest millennials are currently 43 years old and will be 68 by the end of the period covered in the report. 

It comes after UBS last year said the mass wealth transfer was for the first time rewarding more billionaires through inheritance than employment. 

It coincides with the rise of the term “nepo-baby”, typically used for Gen-Zs and millennials born into wealth.

Many can be spotted high up the ranks in some of the world’s largest businesses. 

The children of LVMH founder Bernard Arnault have been primed to take over the business and could be in line for vast fortunes when the 75-year-old dies. 

The findings come as much other research has started to underline growing inequality among millennials and Gen-Zs based on whether they will inherit money or not. 

Research from the Institute for Fiscal Studies late last year found that nearly half of first-time buyers in their 20s received help from parents or other family members to get on to the property ladder. UBS noted that these figures may in actuality be smaller because of inheritance taxes and debts. 

The growing wealth transfer has already resulted in a record number of inheritance disputes in the UK. Lawyers working with families passing down wealth also warn that issues around incapacity and inheritance are becoming an increasingly big part of their work as people live longer and have more wealth.