The United Kingdom is experiencing an unprecedented exodus of millionaires, with projections indicating a net loss of 9,500 high-net-worth individuals (HNWIs) in 2024, according to the Henley Private Wealth Migration Report. This represents more than double the record-high figure from the previous year, underscoring a significant shift in the country's attractiveness to the global elite.
The UK now trails only China in terms of millionaire outflows, with the Asian giant expected to see a net outflow of 15,200 HNWIs this year. This marks a stark reversal for Britain, which was once a prime destination for the world's wealthy, attracting affluent families from Europe, Africa, Asia, and the Middle East throughout the mid-20th century.
Henley's report highlights a decade-long trend of increasing outflows of wealthy individuals from the UK, exacerbated by political and economic uncertainties. The period from 2017 to 2023, post-Brexit, saw the UK lose a total of 16,500 millionaires to migration. Preliminary estimates for 2024 are even more alarming, suggesting that the trend is accelerating.
Hannah White, CEO of the Institute for Government think tank, noted that the upcoming general election is likely to expedite this exodus. Recent polls indicate a significant lead for the left-of-center Labour Party over the ruling Conservative Party, with Labour capturing 46% of the vote compared to the Conservatives' 21%. The right-wing Reform Party also holds a notable 13% of the vote, according to a Savanta poll for The Telegraph.
Labour, while positioning itself as pro-business, has also pledged to close tax loopholes benefiting the wealthy, reduce tax avoidance, and eliminate tax breaks for independent schools. These policies are part of a broader strategy to increase funding for public services. The party's manifesto includes plans to abolish the UK's non-dom tax regime and impose higher taxes on residential property purchases by non-UK residents.
"The outflow of high-net-worth individuals already generated by the economic and political context is now being accelerated by policy decisions ahead of the election," White commented in Henley's report. She emphasized that Labour's proposed tax changes, along with the Conservative government's alignment with some of these policies, are contributing to the migration of the wealthy.
Currently, the UK imposes a 40% duty on estates valued above £325,000 ($412,420). The potential removal of the non-dom tax regime from 2025 and the Labour Party's commitment to ending VAT exemptions for private schools are further disincentives for the wealthy to remain in the UK.
In contrast, other major economies have seen an increase in their HNWI populations. Germany, for instance, has witnessed a 15% rise in the number of millionaires over the past decade, while the US has seen a staggering 62% increase. The UK, however, has experienced an 8% decline in its millionaire population during the same period.
Henley & Partners, the investment migration consultancy that compiled the report, expects 128,000 millionaires to relocate globally in 2024, surpassing the previous record of 120,000 set in 2023. Dominic Volek, the group head of private clients at Henley & Partners, described this as a "great millionaire migration," indicating a significant shift in the global landscape of wealth and power.
Volek pointed out that geopolitical tensions, economic uncertainty, and social upheaval are driving this migration. Countries that continue to attract millionaires typically offer a combination of existing wealth, stability, and safety.
As the UK grapples with these challenges, London's stock market has also experienced fluctuations. Political instability and economic uncertainties have caused the market to lose its previous dominance in Europe. In comparison, the City of London is witnessing a resurgence in demand for office space, signaling a potential stabilization in its financial sector.
