London has dropped from the top five wealthiest cities following an exodus of millionaires, dealing another setback to Rachel Reeves.
It has seen a greater loss of millionaires compared to almost anywhere else globally, with only Moscow faring worse.
A yearly worldwide wealth report indicated that London saw a decline of 11,300 millionaires in the last year, which includes 18 centimillionaires and two billionaires. Currently, the total number of millionaires in the city stands at 215,700.
A person is considered a centimillionaire if they have assets worth at least £100 million, whereas a billionaire has net worth exceeding £1 billion.
The research conducted by New World Wealth for the consultancy firm Henley & Partners defines wealth based on "liquid investable" assets like cash, bonds, and shares, but does not include real estate possessions.
The analysis had been finished prior to the recent stock market downturn caused by Donald Trump’s tariff announcement.
According to New World Wealth, London is among just two out of the top 50 cities that have experienced a decline in the number of millionaires. The other city is Moscow.
Since 2014, London has experienced a 12 percent decrease in its most affluent inhabitants, largely due to increased taxes, Brexit, and the depreciation of sterling.
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On the contrary, Moscow saw a 25 percent decline, primarily because of Russian President Vladimir Putin's invasion of Ukraine in 2022.
Nevertheless, overall, London has seen the departure of more millionaires than any other city, with roughly 30,000 having left in the last ten years, as opposed to around 10,000 from Moscow.
Last week, The Times revealed that the exodus of wealth from the UK increased markedly during the initial three months of this year, notably prior to the Labour administration’s choice to eliminate the non-domiciled tax system.
From Monday onwards, the longstanding arrangement that permitted affluent overseas individuals in the UK to protect their worldwide assets from local taxation for an annual payment starting at £30,000 has been supplanted by a significantly more disadvantageous tax regime based on residency.
With the introduction of the new system, all affluent foreigners residing in the UK for more than four years are now required to pay British income tax and capital gains tax on their earnings globally.
Should they stay in the country for an extended period, their worldwide assets could become liable for the UK's 40% inheritance tax (IHT), which ranks among the highest such rates globally.
Tax advisers have noted that non-domiciled individuals, often referred to as 'non-doms,' are moving to jurisdictions such as Portugal, St Kitts and Nevis, Spain, Greece, the UAE, and Italy. These locations offer either reduced tax rates or allow for a flat yearly payment structure to bypass most taxation obligations.
For example, Italy levies an annual fee of €200,000 on non-residents seeking to shield their international assets from domestic taxation.
Andrew Amoils, who leads research at New World Wealth, stated that numerous wealthy investors have departed from Britain due to its high taxation rates.
He stated: "The capital gains tax and inheritance tax rates [IHT] in the UK rank among the highest globally, discouraging affluent business proprietors and retirees from residing there."
He commented, "It's important to recognise that many firms listed on the FTSE 100 were founded by centimillionaires; thus, their losses significantly affect the economy."
Nevertheless, he pointed out that several elements contributed to London’s lackluster performance. These included its incomplete recovery from the 2008 financial downturn, its insufficient development of emerging tech companies, as well as the "diminishing significance" of the London Stock Exchange."
He stated: "Previously, the LSE held the position of being the biggest stock exchange worldwide based on market capitalisation; however, it has since dropped to rank 11th on a global scale."
Over the last twenty years, we've seen a significant downturn, marked by numerous company delistings and a notably low number of new IPOs.
At present, the wealthiest city globally is New York City, which boasts 384,500 millionaires. It is trailed closely by the San Francisco Bay Area, a hub for numerous tech companies because of its proximity to Silicon Valley.
Tokyo stands as the third richest city, hosting 292,300 millionaires, trailed closely by Singapore.
The only other British city in the top 50 is Manchester, ranking 46th with 23,400 millionaires.
Australia has four cities among the top 50, China has five, and Germany has three cities in this ranking.
Nevertheless, despite the considerable decrease in the number of millionaires, London still ranks as the fourth most costly city for residents, with its cost per square meter for properties exceeding those of all cities apart from Hong Kong, New York, and Monaco, which boasts the highest-priced residences.