European wealth exceeded its pre-crisis peak in 2013, reaching a new all-time high of EUR56 trillion, up 1.7 per cent on the previous year, according to the inaugural Julius Baer Wealth Report Europe.
However, the evolution of wealth across countries since the financial crisis in 2007 has differed substantially, with the likes of Switzerland and Germany adding over EUR1 trillion and EUR2 trillion in net wealth to their pre-crisis peaks, respectively.
Wealth fell 28 per cent in Spain and 23 per cent in Greece, equating to a reduction of private wealth of EUR1.4 trillion and EUR169bn, respectively, in absolute terms.
The report also finds that over two-thirds of Europe’s wealth lies in the large core countries Germany, UK, France and Italy. Core Europe also has the largest number of wealthy households with Germany boasting 1.4 million millionaire households, France with 1.3 million, Italy with 818,000, and the UK with 796,000.
However, the picture changes when considering average wealth-per-adult levels across Europe. The smaller core countries like Luxembourg and Switzerland exhibit the highest wealth-per-adult levels at EUR432,200 and EUR394,600 per adult, respectively. These levels are distinctly higher than the average European wealth per adult at EUR167,100, while average wealth per adult in Spain is estimated to amount to just EUR92,300 and EUR58,900 in Greece.
The distribution of wealth in Europe remains varied, but on average, the report estimates that the wealthiest 10 per cent of European households own over half of the continent’s wealth, while the bottom half of wealth holders own less than 10 per cent of Europe’s total wealth. Concentration of wealth was highest in Austria and Germany where 40 per cent and 35 per cent of total private wealth respectively is owned by the richest one per cent. The UK, Greece and the Netherlands had the lowest concentration with 15 per cent or less of total private wealth owned by the richest one per cent.
New long-term datasets referenced in the report suggest that the concentration of wealth in Europe is on the rise again, after much European wealth was destroyed in the 20th century due to the two World Wars and the Great Depression of 1929.
The report also studies the role family businesses play in building wealth. Robert Ruttmann and Dimitri Bellas, lead authors of the report, say many of Europe’s most enduring family-led companies remain well positioned to drive economic progress (and family wealth) in the 21st century.
“As long as capital returns exceed economic growth rates in Europe, European families owning capital are set to gain a larger slice of Europe’s consistently expanding wealth cake,” Ruttmann says.
The report shows that the average prices of luxury goods – expensive wines, designer handbags and sports cars – are rising at least twice as fast as inflation, up 38 per cent since 2004 compared to 18 per cent for European inflation.
Boris F.J. Collardi, CEO of Bank Julius Baer, says: “The first Julius Baer Wealth Report Europe offers its readers many new perspectives on wealth in Europe. In a broader sense, the report reflects Julius Baer’s commitment to helping our clients navigate complexity by anticipating trends, offering best-in-class services, and through our exclusive focus on the private client.”