In our view, other European countries where religious tensions are starting to emerge such as Belgium, Germany, Sweden and the UK will also be negatively affected in the near future.
China and India outflows not a concern
The outflows from India and China are not particularly concerning as these countries are still producing far more new millionaires than they are losing. Also, once the standard of living in these countries improves, we expect several wealthy people to move back.
Southern Europe in the most trouble
Southern European countries such as Italy, Greece and Spain have all seen large outflows of millionaires over the past few years and we expect this exodus to continue going forward. In our view, the possible breaking up of the EU would hit these countries the hardest due to their large state pension obligations.
Russia and Brazil are tricky ones
Russia and Brazil both have strong potential for growth, but the outflow of millionaires from these countries over the past year is a concern.
Russia has a number of underlying problems, mainly related to an unhealthy level of government intervention in the local business sector. Its anti-USA stance is also harming inward investment and making it difficult for foreign companies to enter the market.
In Brazil, the downturn in the local economy and rising crime rates are pushing many millionaires out of the country. It is difficult to predict when the situation there will improve.
Turkey and Nigeria may be next
We expect millionaire outflows from Nigeria and Turkey to increase over the next few years. Both of these countries are suffering from serious political and economic problems. They are also both being negatively impacted by terrorism and religious violence.
Why do millionaires leaving a country matter?
Bad sign - millionaires are often the first people to leave. They have the means to leave unlike middle class citizens.
Money outflow – when millionaires leave a country, they take large amounts of money with them which impacts negatively on the local currency, local stock market and local property market.
Lost jobs - millionaires employ large numbers of people. Around 30% to 40% of millionaires are business owners.
Lost revenue and tax – millionaires spend a lot of money on local goods and services and pay a large amount of income tax.
Pensions & benefits - millionaires are not reliant on state pensions and benefits, which makes them a relatively easy and cheap group to please.
Resilient – millionaires are resilient to economic downturns and can keep an economy going during tough times.
Brain drain – millionaires are normally highly skilled and highly educated. Many are also innovators.
Brexit impact on the UK
In our view, a Brexit will not result in an outflow of millionaires from the UK. On the contrary, we believe that wealthy UK citizens are more likely to stay in the UK if there is a Brexit. This view is backed up by the fact that most of the wealthy British people we interviewed voiced concern over the UK’s open border policy with Europe.
New World Wealth © Andrew Amoils
