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Quarter of UK households to enjoy million dollar status by 2016 as UK experiences a wealth explosion

While most of us simply dream about living a million dollar lifestyle, a new report published today predicts that by 2016 the dream will be a reality for a quarter of  households in the UK. Barclays Wealth Insights, a new quarterly report written by the Economist Intelligence Unit (EIU) on behalf of Barclays Wealth, the wealth management arm of Barclays, says that households in the UK with more than $1 million (£526,900) in property, land, savings and investments will grow to 26 per cent in the next ten years. This significant growth of aggregate wealth will outstrip any other G7 economy, making the UK home to the highest concentration of $1 million households around the world.  By comparison, it is predicted that global powerhouses like the US and Japan will have 16 per cent and 22 per cent in the numbers of million dollar households. The new findings from the first volume of Barclays Wealth Insights, are based on a new forecast developed by the Economist Intelligence Unit specifically for Barclays Wealth to provide for the first time a detailed prediction on the growth of wealthy individuals over the next decade.  Barclays Wealth Insights charts the growth in financial wealth (investments and savings) and non-financial wealth (property and land) among G7 households and is supported by EIU’s Business Environment Ranking data and a panel of wealth experts, drawn from academia, industry and financial circles to provide unique insights into trends driving wealth creation.   UK wealth explosion The UK wealth explosion is further supported by the prediction that the country will play host to one million ‘super millionaires’ (those with assets over $3 million (£1,580,700) for the first time in the next decade.   The UK is one of five G7 countries that will break the million, ‘super millionaire’ threshold by 2016, following US, Canada, Japan and Germany. Furthermore, within the next decade, the UK will also see a huge rise in the number of ‘nearlionaires’. Almost half of all UK households (49 per cent) will hold aggregate wealth between US$500k and US$1m, with all annual household incomes set to increase on average by 67 per cent over the next ten years. Factors that are driving UK wealth creation include a strong property market, and an increasing entrepreneurial culture that encourages individuals from all walks of life to take risks as they strive for business success.  This means that the typical wealthy individual in the UK will increasingly shift from the stereotype of inherited wealth. Mark Kibblewhite, Managing Director of Barclays Wealth’s private banking division, explains: “The UK wealth explosion is good news for individuals, businesses and the economy alike.  The UK is full of vibrant, dynamic and innovative individuals and the predicted growth of wealth is testament to their astute business sense and our increasingly stimulating entrepreneurial culture.” The UK’s wealth conduciveness is supported by EIU’s unique Business Environment Ranking, which uses a range of measures to assess how conducive a country is to business (and with it wealth) development.  The UK is 7th ahead of Germany (14th), France (18th) and Asian powerhouse Japan (27th).  “With a buoyant economy and property market, plus a significant entrepreneurial culture, the UK is well positioned to put individuals on the path to financial success,” said Rob Mitchell of the EIU. The democratisation of wealth The growth of the wealthy is driving a significant social shift in the UK and beyond which will continue to grow at pace in the next decade.   “People from all walks of life are becoming wealthy, which presents new opportunities and challenges,” said Mr Kibblewhite. “New wealth can lack access to familial infrastructure and support that ‘old wealth’ might have to help manage assets. However new entrepreneurs want closer control and handling of their assets, so striking a balance to provide specialist expertise but also choice and control is key.” The broadening of the social background of high net worth individuals is attributed to a range of factors. A shift from manufacturing to service industries has pushed down capital barriers to setting up a business. “IT phenomena such as eBay trading, and the boom in buy-to-let property and property prices has meant that people can make more money without high start-up costs or expensive education,” said Mr Kibblewhite. There is a growing proportion of wealthy people that have made money rather than inherited it, such as Philip and Tina Green, owners of Arcadia, to the Hinduja brothers, Sri and Gopi, with wealth built on property, insurance and real estate. “There is also a new artistocracy who have sold businesses and never need to work again,” comments Philip Beresford, who compiles the Sunday Times UK Rich List. Barclays Wealth Insights panelist David Molian, a lecturer in enterprise at Cranfield School of Management, commented: “As recently as 20 years ago, an owner manager was viewed as someone who couldn’t get a job. Now entrepreneurs are the heroes of our economy. “There is a whole celebration of business, look at programmes such as the BBC’s Dragon’s Den. This has enabled owner-managers to be more confident, and more likely to attract talented people to work for them.” Barclays Wealth Insights also shows more individuals are becoming wealthier at a younger age. Managing Director of Sunseeker, UK speedboat manufacturer, Robert Braithwaite, has noticed a significant change in his UK customer: “It used to be a man of 50 – 60, now we’re down to about 32 – 33.  I attribute this trend to a more widespread entrepreneurialism as the venture capital industry has matured.”  “We are seeing wealth accumulation at a much earlier stage in life,” adds Mr Kibblewhite. “Many still have a lot of earning potential ahead of them, so their investment risk profile is different”. The next volume of Barclays Wealth Insights will be published in early 2007. ENDS