The AfrAsia Bank’s latest UK wealth report says that the UK’s new taxes on non-doms and foreigners with homes in the UK, its inheritance taxes, and rising crime levels and religious tensions, particularly in London, make other cities like Sydney, Melbourne, New York, Geneva and San Francisco far more attractive.
The report estimates that since 1990, some 85,000 HNWIs have moved to the UK. But for the first time in 30 years, the trend reversed in 2017, when the UK experienced its first major net outflow with approximately 5,000 HNWIs departing and only 1,000 arriving.
This outflow is important, the report warns, because wealth migration figures provide a “very important gauge of the health of an economy”.
“For instance, if a country is losing a large number of millionaires to migration, it is probably due to serious problems in that country (ie crime, lack of business opportunities, religious tension etc).”
“It can also be a sign of bad things to come as HNWIs are often the first people to leave – they have the means to leave unlike middle class citizens.”
“If one looks at any major country collapse in history, it is normally preceded by a migration of wealthy people away from that country,” it adds.
The report has identified four major risks to the UK’s future economic health – all of which HNWIs are likely to factor in to their decision to stay or go. The first, not surprisingly, is the possibility of a bad Brexit deal with the EU.
The second is the UK’s high population density. This, it says, makes it more vulnerable to problems than countries like Australia, Canada and the US with their large amounts of land and natural resources.
The UK also pays out large amounts of money in welfare benefits. “Such benefits are difficult to remove when times become tough, which makes the UK’s economic policy far less flexible than emerging market countries such as China,” the report notes.
A fourth risk is the jump in the crime levels in the UK and the increase in religious tensions.
The knock-on effect of HNWIs choosing to leave the UK could have a profound impact on the UK’s highly profitable luxury hotel industry, classic car sales, art market and luxury goods sector. It is also likely to affect the $2.2trn (£1.7trn) of HNWI funds currently managed in the UK.
The report also detects an increase in the number of wealthy Londoners moving out of the capital and heading for small but affluent commuter towns like Bray, Taplow and Marlow.