Why are the UK and China set to face the biggest exodus of millionaires in the world?

China and the United Kingdom are witnessing an unprecedented exodus of millionaires, with both nations set to lose more wealthy individuals than any other country this year. According to the Henley Private Wealth Migration Report, which calculates net migration of high net-worth individuals (HNWIs), the outflow from these nations is in thousands. We explain the factors driving this trend and its implications for the economies of the UK and China.

Millionaire migration from China

China is projected to see the departure of 15,200 millionaires in 2024, according to the Henley Private Wealth Migration Report. This trend resumed following the easing of pandemic travel restrictions, which had temporarily halted the movement of rich Chinese citizens. Last year, China saw 13,800 HNWIs depart, mostly to the US, Canada, and Singapore This year, too, many Chinese millionaires are relocating to these three countries, drawn by the stability and economic opportunities these destinations offer.

The main reasons for this exodus include concerns over China’s economic trajectory and rising geopolitical tensions. With uncertainties looming over the domestic market and an increasingly strained relationship with Western countries, Chinese millionaires are seeking safer havens for their wealth and families.

Millionaire migration from the UK

The UK is expected to lose 9,500 millionaires in 2024, making it the second-highest after China in terms of outflow of wealthy people. This marks a significant reversal for a country that traditionally attracted millionaires from around the world. Historically, London was a magnet for the wealthy from Europe, Asia, Africa, and the Middle East.

Today, many of these millionaires are moving to destinations like the United Arab Emirates (UAE). The Henley report notes that this migration trend is not new but has accelerated due to a combination of Brexit, the energy crisis spurred by the war in Ukraine, and rising inflation.

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Reasons for the millionaire exodus

For both China and the UK, the reasons behind the departure of millionaires are multifaceted. In China, the driving forces include:

• The slowing growth of China’s economy and concerns about future stability
• Geopolitical tensions and increasing friction with Western nations, leading to an unpredictable business environment
• The Chinese government’s crackdowns on various sectors and increasing regulatory scrutiny have made the wealthy uneasy.

In the UK, several factors contribute to the outflow:

• The UK’s exit from the European Union (Brexit) has created long-term economic and political uncertainties
• The potential for higher taxes on the wealthy, including plans to end preferential treatment for non-domiciled residents if Keir Starmer comes to power
• With an election approaching, policy decisions targeting the rich are driving them to relocate

UAE: a desirable destination for millionaires

Conversely, countries like the UAE are becoming popular destinations for these millionaires due to:

• Tax Benefits: No personal income tax and favorable corporate tax regimes.
• Business opportunities: A strategic location with excellent connectivity and a thriving business ecosystem.
• Quality of life: High standards of living, safety, and luxury amenities.

Economic implications of millionaires leaving

The departure of millionaires can be seen as a sign of underlying economic issues. Henley & Partners note that millionaire migration figures are a critical indicator of a nation’s economic health. A significant outflow suggests severe problems, potentially foreshadowing a decline in economic stability. Wealthy individuals are often the first to leave when conditions become unfavorable, as they have the resources and flexibility to relocate.

Moreover, migrating millionaires bring significant foreign exchange revenue to their new countries. For instance, a millionaire moving with $10 million equates to the host country generating $10 million in export revenue, providing a substantial economic boost. The loss of such individuals can therefore have a negative impact on the source country’s economy.

How is India doing

India is the third on the list of top millionaire losers globally. The country is set to see 4,300 millionaires leave this year. However, India has stemmed its wealth exodus quite a bit. Last year, as many as 5,100 rich people left the nation. The report said that India is seeing high net outflows because of the success of its sizeable economy in generating new millionaires. “Indian millionaires often depart the sub-continent in search of a better lifestyle, safer and cleaner environments, and access to more premium health and education services,” Henley said.