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Britain’s Millionaire Club Shrivels By Half On Slump

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

May 27 (Bloomberg) -- The U.K.’s millionaire club has shriveled by half because of the slump in property prices, falling stock prices and smaller bonuses, the Centre for Economics and Business Research said.

There are currently 242,000 people living in Britain with assets of at least 1 million pounds ($1.6 million), compared with 489,000 estimated in the CEBR’s previous report in 2007, the research group said today in London.

The financial crisis cost British households 1.9 trillion pounds of their wealth since July 2007, according to a report in March by PricewaterhouseCoopers LLP. With the property market extending its slump and the economy mired in a recession forecast by the government to be the worst since World War II, the number of millionaires may keep falling this year.

The drop “reflects the collapse in the property market, the fall in the values of shares and the 70 percent drop in City bonuses,” Douglas McWilliams, chief executive of the CEBR, said in a statement. “With property prices near to bottoming out, we would expect the number of millionaires to start to rise again in 2011.”

Other analysts are more pessimistic. Savills Plc said May 1 that the property market may not recover until 2012, a year later than projected previously, as unemployment rises and the crisis deters buyers. Jones Lang LaSalle Inc. said today that U.K. house prices may fall as much as 14 percent this year.

Wealth Drop

Britain’s millionaires, who more than doubled in number between 2003 and 2007 as property prices soared, have seen their wealth drop by almost a quarter in the past year, the CEBR said.

“It looks as though the experience for millionaires is relatively similar to that chronicled by the Sunday Times for their rich list, which showed a fall in the number of U.K. billionaires this year from 75 in 2008 to 43 this year,” the CEBR said.

The newspaper showed a 38 percent drop in the wealth of those on the list of the nation’s richest individuals, larger than the 24 percent decline estimated for the average U.K. millionaire in today’s report, the CEBR said.

The wealth squeeze has also hurt luxury goods sales. The CEBR cited reports saying that sales of Bentley Motors Ltd. cars fell by two-thirds so far this year, while Bayerische Motoren Werke AG car sales are down 35 percent.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.

Last Updated: May 27, 2009 06:01 EDT

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