The number of high net worth individuals (HWNIs) in the European
Union (EU) grew by 6% in 2009 to reach 2,718,000 at the beginning
of 2010. 

But the HWNIs population is still 8.3 percent
below the levels reached in 2008.

The Dimension of Wealth 2010 report
by strategy consultants MDRC, said the rise in numbers is due to an
increase in asset values in existing investments rather than new
wealth creation. 

Limited credit to small and medium-sized
enterprises (SMEs) has been a key constraint on EU wealth creation,
as individual investment portfolios are used to finance businesses
activities, the MDRC report said.

 

Deutschland dominates

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The largest HNWIs segment is in Germany where
there are 555,800 individuals with more than $1m equivalent in
investable assets.

The UK is home to 284,317 millionaireswho
represent £1.28trn ($1.7trn) of net wealth, according to
London-based firm CoreData Research UK. 

The increase or decrease of wealth creation
has to a large extent, mirrored the economic fortunes of the
country of domicile.

Spain and Ireland are a case in point. 
Both countries have experienced a sharp reduction in economic
activity and this is reflected in the drop in the number of Irish
and Spanish HNWIs.

 

East Europe leads HNWI
growth

Only in Poland and Slovakia is the HNWIs
sector larger in 2010 than in 2008, reflecting stronger
economies.

Poland was the only EU country to avoid
falling into recession and post GDP growth of 1.8 percent in
2009.

“The one bright spot in this otherwise subdued
sector assessment is the resilience of the fledgling HNW sector in
Poland,” the report said. 

The Polish economy continues to grow and is
expected to reach 3% or 4% this year.

 

Uncertain outlook

But MDRC said the outlook for the sector
continues to be uncertain, with reduced public expenditure expected
to adversely affect SMEs in 2010 and 2011. 

Investor confidence remains subdued and the
majority of EU investors are still reluctant to move into higher
risk assets. 

A consequence of the past 18 months has been a
greater acceptance of a “closed source” investment model compared
to an “open source” model.  This in effect trades off the
potential for better returns for greater financial security of
products manufactured by an investment manager. 

“The overhang of a ‘double dip’ recession, the
sovereign debt crisis and government driven austerity measures do
not encourage the majority of investors to move away from lower
risk into higher risk assets,” the report said.