Voting to leave the European Union cost the UK around $1.5 trillion (£1.2 trillion) in wealth, and robbed 400,000 people of their status as dollar millionaires, according to the latest Global Wealth Report from the Credit Suisse Research Institute.
The annual Global Wealth Report — which tracks the distribution of wealth across the world, as well as the world’s richest countries — showed that “household wealth fell by $1.5 trillion in the United Kingdom, as a direct consequence of the Brexit vote.”
After Britain voted to leave the European Union in June, the value of the pound crashed to a 31-year low against the dollar, and quickly became the worst performing of the major currencies worldwide. Sterling has now fallen around 15% since the vote to trade at roughly $1.24.
Generally speaking, global assets are priced in dollars, meaning that when a currency depreciates against the dollar, the wealth of a nation will fall. This is reflected in the fact that no major global economy has lost more wealth than the UK in 2016.
The only nation to come vaguely close is China, which has lost a great deal of wealth thanks to the ongoing devaluation of the yuan. China’s wealth has only fallen by roughly half the amount the UK has witnessed.
Here’s the chart illustrating that point:
Sterling’s crash against the dollar also means that roughly 406,000 people who were millionaires in dollar terms prior to the EU referendum, can no longer be considered as such.
“The impact of the Brexit vote is widely thought of in terms of GDP but the impact on household wealth bears watching,” Michael O’Sullivan, chief investment officer in Credit Suisse’s wealth management arm told the Guardian.
“Since the Brexit vote, UK household wealth has fallen by $1.5 trillion. Wealth per adult has already dropped by $33,000 to $289,000 since the end of June. In fact, in US dollar terms, 406,000 people in the UK are no longer millionaires,” O’Sullivan added.
Regardless of the drop in household wealth caused by Brexit, Britain remains third overall globally when it comes to wealth per adult in major economies. The average British adult has an overall wealth of $288,800, coming below only Switzerland and the USA.
Overall wealth is measured by combining financial assets, real assets like property, and subtracting debts. You can see a breakdown of the UK’s wealth below:
Credit Suisse also noted that the overall wealth of Brits actually increased over the course of the past year when measured in pound terms, despite the dollar-denominated fall. Here’s the key extract:
“The United Kingdom had a tumultuous end to 2015 — 2016, with sharp declines in the exchange rate and the stock market following the vote to leave the EU in the June 23 referendum. Nevertheless, as of the end of June, wealth per adult in pounds sterling was 6% above its level a year earlier. The stock market recovered later, but the outlook is very uncertain, both for the economy and household wealth.”