Millionaires' club gets even more exclusive as membership falls by half

Published on 26/05/2009 22:02

THE number of millionaires in Britain has fallen by half over the past two years, according to a new report published today.

The impact of the recession has culled membership levels of the exclusive club to a six-year low, with thousand of Scots affected. The Centre for Economics and Business Research (CEBR) estimates that there are currently about 242,000 millionaires in the UK, compared with 489,000 in 2007.

The centre cites the stalling property market and the slump in share prices as the main factors behind the decline, with people who crept over the elite threshold thanks to rising house prices now seeing their assets shrink in value.

Only three years ago, the CEBR estimated that the number of millionaires in Britain would swell to an all-time high of 760,000 by 2010 – a forecast that has been sunk by turmoil in the worldwide economy. Even with property prices showing signs of bottoming out, the CEBR estimates the millionaires' club will not increase in size until 2011.

Douglas McWilliams, chief executive of the CEBR, said: "The reason why the drop in the number of millionaires is so large is because a very large number of people had just crept over the millionaire threshold in the period from 2003 to 2007.

"This was mainly caused by the rise in house prices over that period. Having just crept over the threshold, most of these people have crept back under it again – many perhaps without ever knowing that they had become millionaires for a temporary period."

The report spells the latest bad news for Britain's wealthiest residents, with thousands of people in Scotland losing their millionaire status.

The exact number of those with a seven-figure fortune north of the Border is unclear, but according to the 2007 edition of the UK Millionaires Map, compiled by wealth management experts KDB, there were 37,326 such individuals, with Edinburgh alone home to 9,738.

If the CEBR estimates are correct, the number of millionaires in the capital may have fallen below 5,000. The same KDB study suggested there were 11,288 millionaires in Glasgow two years ago, which would mean around 5,600 people have seen their riches fall below seven figures.

Specific wealth hotspots could have been hit hard by the trend suggested by the CEBR.

A study by Eurodirect four years ago, based on shareholder records from the registers of the FT top 500 companies, suggested the EH4 postcode of Edinburgh – which includes the Blackhall, Barnton, and Silverknowes suburbs – had 277 millionaires, the highest in the UK.

At number two was AB15, comprising the Blacktop, Kingswells and Fairley districts of Aberdeen, with 240 millionaires.

The latest annual Sunday Times Rich List recently suggested only 43 billionaires remain in the UK, compared to 75 in 2008. Although the Rich List estimated that the collected wealth of the nation's richest people had fallen by 38 per cent in the past 12 months, Mr McWilliams put the figure slightly lower at 24 per cent.

"The difference almost certainly reflects the much higher levels of borrowing in relation to assets for billionaires than millionaires and the different pattern of asset holdings," he said.

"Billionaires have less than 10 per cent of their assets in property whereas the average millionaire in 2007 had 42 per cent of assets in property."