Zurich – Europeans’ private wealth rose 3.9% in 2020 and reached a new high of 69 trillion euros – despite a 6.4% drop in economic output linked to the pandemic. This shows that the wealth of Europeans is growing faster than economic output, which leads to increased inequality.
Redesign Financial Services (RFS), an independent think-tank, has published the first Europe Wealth Report. The report, backed by a private bank LGT, provides insight into the complex relationship between wealth growth and economic performance in European countries, with a particular focus on the highly disruptive effects of the 2020 pandemic.
Europe’s private wealth has reached an all-time high of €69 trillion. This increase in personal wealth is especially noteworthy when you consider that European economic growth has been severely hampered in 2020. Perhaps the best example of the precarious economic impact of the 2020 pandemic is comparing Europe’s 6.4% decline in real GDP with an increase of 3.9 % in private wealth in the same year.
The most important results:
- In the year of the pandemic 2020, wealth in Europe reached an all-time high of €69 trillion, an increase of 3.9% over the previous year. The core countries, Germany, France, the United Kingdom, and Italy, account for more than 70% of the total net wealth in Europe.
- Spain, Switzerland, and Germany recorded the highest increases in average wealth in the past decade at 94%, 83% and 51%, respectively. 14% of Swiss households have net assets in excess of €1 million.
- Wealth is increasingly concentrated. The richest 10% of European households own 51% of total European net wealth, while the richest 1% of Europeans own 19% of total European wealth.
- The highest concentration of wealth is in rich countries. The richest 10% in Switzerland, the Netherlands and Austria own 64%, 63% and 57% of the total private wealth in their countries.
Prospects for 2022
Given the continuing impact of the pandemic and the deep structural challenges facing European economies, the outlook for European economic growth remains discouraging. While a strong economic recovery is expected in 2021 and 2022, the pandemic has increased inequality in most countries and is unlikely to narrow this gap.
Doctor. Robert Rotman, President of RFSHe explains: “Assuming the investment return remains close to the 200-year average of 4 to 5% per year, it is clear that the concentration of European wealth is likely to increase further in the coming years. In other words, the wealthy are likely to get a larger slice. From the pie of growing private wealth.” With a view of 2022 Zanyar Sharifi, CEO of RFSHe said: “It will be essential that business leaders, policy makers, investors and entrepreneurs work together to create an environment in which the active exchange of ideas is the basis for social progress in Europe.” (RFS/mc/pg)
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