Global inequality is growing, with half the world’s wealth now in the hands of just 1% of the population, according to a new report.
The middle classes have been squeezed at the expense of the very rich, according to research by Credit Suisse, which also finds for the first time that there are more individuals in the middle classes in China – 109m – than the 92m in the US.
“Middle class wealth has grown at a slower pace than wealth at the top end,” said Tidjane Thiam, the chief executive of Credit Suisse. “This has reversed the pre-crisis trend which saw the share of middle-class wealth remaining fairly stable over time.”
The report shows that a person needs only $3,210 (£2,100) to be in the wealthiest 50% of world citizens. Some $68,800 secures a place in the top 10%, while the top 1% have more than $759,900. The report defines wealth as the value of assets including property and stock market investments but excludes debt.
About 3.4 bn people – just over 70% of the global adult population – have wealth of less than $10,000. A further 1bn – a fifth of the world population – are in the $10,000-$100,000 range.
Each of the remaining 383m adults – 8% of the population – has wealth of more than $100,000. This number includes some 34m US dollar millionaires. About 123,800 individuals of these have more than $50m, and nearly 45,000 have more than $100m. The UK has the third-highest number of these “ultra-high net worth” individuals.
Pyramid of wealth
Photograph: Credit Suisse
The report said: “Wealth inequality has continued to increase since 2008, with the top percentile of wealth holders now owning 50.4% of all household wealth.”
At the start of 2015, Oxfam had warned that 1% of the world’s population would own more wealth than the other 99% by next year. Mark Goldring, Oxfam GB’s chief executive, said: “The fact it has happened a year early – just weeks after world leaders agreed a global goal to reduce inequality – shows just how urgently world leaders need to tackle this problem.
“This is the latest evidence that extreme inequality is out of control. Are we really happy to live in a world where the top 1% own half the wealth and the poorest half own just 1%?”
The Credit Suisse report concludes that global wealth has fallen by $12.4tn so far in 2015 – to $250tn – the first drop since the 2008 banking crisis. This is largely a result of the strength of the dollar, the currency used for Credit Suisse’s calculations.
The estimates are for the end of June 2015, when Chinese stock prices had fallen 20% from the peak after soaring by more than 150% between June 2014 and mid June 2015. The report was published at the end of September, by which time the Chinese stock market had fallen a further 25%.
A year ago, the the UK had been singled out as the only country in the G7 where inequality had risen this century. In this year’s report, the authors say:
Inequality is the great concern of our age. So why do we tolerate rapacious, unjust tax havens?
“[In the UK] wealth inequality has risen since 2000, as the gap in wealth per adult between the lower segment and rest of the population has increased.”
The UK is fourth in the world for median wealth – which strips out the impact of those at the highest and lowest end of the wealth league – at $126,500 (£83,000) per person, down 13% on a year earlier.
The Credit Suisse survey calculates that there are now 2.4 million dollar millionaires in the UK , up 68,000 on a year earlier. In the US the number of millionaires is now more than 15m – up 903,000.
The UK was one of only three countries, along with the US and China, to record a rise in household wealth in 2014. It also leapfrogged Germany in the number of people with more than $50m, with 400 more than 2014 and a total of 5,400. This put the UK in third place, behind the US with 61,300 of the world’s wealthiest and China with 9,600.
Ultra-high net worth individuals
Photograph: Credit Suisse
This year’s report focuses on the middle classes, as defined by personal wealth rather than profession. It says 14% of adults worldwide are middle class, with $50,000-$500,000 of assets.
But Markus Stierli, of the Credit Suisse Research Institute, said: “From 2008 onwards, wealth growth has not allowed middle-class numbers to keep pace with population growth in the developing world. Furthermore, the distribution of wealth gains has shifted in favour of those at higher wealth levels. These two factors have combined to produce a decline in the share of middle-class wealth.”