UK millionaires halved amid recession

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(Xinhua)
Updated: 2009-05-31 11:33

LONDON -- The economic recession has forced thousands of wealthy British people out of the club of millionaires, and the trend is only likely to turn around in two years, a British independent research group says.

The number of millionaires has been halved in the past two years to just under 250,000, according to the latest estimates of the Center for Economics and Business Research (CEBR), a top British commentator on economics and business trends.

"Our latest estimates suggest that there are now only 242,000 millionaires this year after the number peaked at 489,000 in 2007, and show that membership of the millionaires club was only fleeting for many," the CEBR said in a forecast released earlier this week.

The CEBR calls attention to the big impact of the recession on the number of British millionaires, a phenomenon which does not fit in with their expectations.

"When we last looked at the number of millionaires in August 2006, we estimated that there were then 376,000 millionaires but that this would roughly double to 760,000 by 2010," said the CEBR.

The halving in the number of millionaires reflects the collapse in the property market, the fall in the values of shares, and a 70 percent drop in city bonuses, the CEBR release said.

The CEBR attributes the huge drop in the number of millionaires to the fact that a very large number of people had just crept over the millionaire threshold over a period of four years between 2003 and 2007 when the number rose from 230,000 to 489,000.

"This was mainly caused by the rise in house prices over that period. Having just crept over the threshold, most of these people have crept back under it again," the CEBR said, adding that many may not have known they had become millionaires for a temporary period.

Falling sales of luxury products were also highlighted as a main reason for the decline in wealth for people in this category. The CEBR cites a fall in the sales of luxury cars.

Sales of Bentley cars have fallen by 66 percent so far this year and BMW sales have dropped by 35 percent compared to an overall decline in car sales of 29 percent.

The CEBR expects the number of millionaires to rise again in 2011, saying that property prices are near to bottoming out.

It also found that the experience for millionaires is on a similar downward trajectory as that estimated by the Sunday Times. The paper's 2009 Rich List showed the number of British billionaires fell from 75 in 2008 to 43 this year.

The paper estimated that the wealth of those on the Rich List had fallen by 38 percent in the past year, a bigger fall compared to the 24 percent decrease in the wealth of the average British millionaire estimated by the CEBR.

"The difference almost certainly reflects the much higher levels of borrowing in relation to assets for billionaires than for millionaires and the different pattern of asset holdings," the CEBR explains.

Billionaires have less than 10 percent of their assets in property, whereas the average millionaire in 2007 had 42 percent of assets in property.

The Sunday Times Rich List 2009 shows that steelmaker Lakshmi Mittal, Chelsea soccer club owner Roman Abramovich and Duke of Westminster, property developer Gerald Grosvenor maintain their top positions on the list of Britain's richest 2000 from a year ago.

However, over the past year, these top billionaires have seen their wealth take a dive by 61 percent, 67 percent and 7.6 percent, respectively.

In contrast, the Queen, Britain's head of state, is only 214th on the list, with an estimated wealth of 270 million pounds (US$391 million), down 1.8 percent from a year ago.

Meanwhile, footballer David Beckham and his wife Victoria retained their wealth of assets worth 125 million pounds, and their position on the list rose from 616th in 2008 to 426th this year.