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European households richer than pre-crisis peak

3rd October 2014, Comments 0 comments

European households are richer than before the global financial and economic crisis battered their continent, though the picture is uneven, a new study by the Swiss bank Julius Baer shows.

For example, in general people in Switzerland have grown rapidly far wealthier, but in Spain they have suffered badly.

The cumulative wealth of Europeans exceeded the pre-crisis peak in 2013, hit an all-time high of 56 trillion euros ($70.6 trillion), up 1.7 percent on the previous year, the bank said.

Before the crisis struck in 2007, the total had been 54.5 trillion euros.

However, Julius Baer noted in a report released late on Thursday, that the evolution of wealth has varied across Europe.

The likes of Switzerland and Germany last year respectively added over 1.1 trillion euros and 2.0 trillion euros in net wealth.

That was equivalent to a net increase in household wealth of 68 percent in Switzerland, and 18 percent in Germany, since 2007.

But over the same period, wealth contracted in crisis casualties such as Spain, down by 28 percent, and Greece, where the fall was 23 percent.

That amounted to a reduction of private wealth of 1.4 trillion euros in Spain and 170 billion euros in Greece.

The study showed that the 10 percent of richest European households possess more than half of the continent's wealth.

A full 27 percent is held by the top one percent.

- Wealth concentration rising -

The concentration was highest in Austria and Germany, with 40 percent and 35 percent of total private wealth owned by the richest one percent.

Britain, Greece and the Netherlands had the lowest concentration, with 15 percent of total private assets owned by the richest one percent.

"New long-term datasets referenced in the report suggest that the concentration of wealth in Europe is on the rise again, after much European wealth was destroyed in the 20th century due to the two World Wars and the Great Depression of 1929," said Julius Baer.

In order to paint a complete picture, the study did not only consider shares, bonds and funds, but also assets such as property.

It found that four countries have more than two-thirds of Europe's net wealth: 13.2 trillion euros in Germany, 9.6 trillion in Britain, 9.5 trillion in France and 8.3 trillion in Italy.

Average per capita wealth across the continent was 167,100 euros.

Luxembourgers topped the table on that front, with 432,200 euros per adult, followed by the Swiss, with 394,900 euros, and Belgians, with 241,000 euros.

Bottom of the table were Slovakia and Greece, with average adult wealth of 33,300 euros and 58,900 respectively.

- European wealth to recover -

The study forecast that European wealth would rise by 40 percent over the next five years, reaching 99 trillion euros by 2019, thanks to post-recession recovery in the continent's largest economies.

"As long as capital returns exceed economic growth rates in Europe, European families owning capital are set to gain a larger slice of Europe's consistently expanding wealth cake," said Robert Ruttmann, an author of the study.

Fellow author Dimitri Bellas said that trend should have a number of implications, including driving up the demand for, and prices of, luxury goods.

The report showed that the average prices of luxury goods -- fine wines, designer handbags and sports cars -- are rising at least twice as fast as inflation, up 38 percent since 2004 compared to 18 percent for European inflation.

© 2014 AFP

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