Migration has become a huge political issue in nations all around the world. Polls show that a majority of voters see immigration as one of the most important issues making it difficult for politicians to avoid taking a stance.
As I have mentioned in prior videos almost half of the global population who are eligible to vote will have that opportunity in 2024 and thus the issue of immigration has been getting a lot of press almost everywhere.
Immigration has been a hot topic in Europe since 2015 - 2016, when over two million people came to the EU, mostly fleeing the civil war in Syria. In Britain, the debate over immigration influenced the 2016 vote to leave the EU.
The topic has been a huge issue in American politics too. Last month, Joe Biden outraged the left wing of the democrat party by enacting one of the toughest executive orders on immigration ever issued by a Democrat, which allows officials to quickly remove migrants illegally entering the United States without processing their asylum requests.
Biden claims this order was given to “gain control” of the US-Mexican border but – in an election year - it was likely heavily influenced by the political need to counter Trump’s charges that the democrat party are soft on illegal immigration.
According to a recent Associated Press survey, roughly two-thirds of Americans disapprove of how Biden is handling border security.
While a lot of the focus has been on economic migrants and asylum-seekers and the pressures they put on public services, a record number of millionaires are also expected to relocate in 2024 according to research from Henley & Partners, a British investment migration consultancy based in London.
According to their research, an unprecedented 128,000 millionaires are expected to relocate this year, eclipsing the previous record of 120,000 set last year. This is a 16% increase from the 110,000 who moved to a new country in the pre-pandemic days of 2019.
As this chart shows, the number of millionaire migrants has trended up since 2013 having slowed down temporarily during the global pandemic, likely driven by the difficulty of moving country during that period.
Henley and partners define these millionaire migrants as individuals with liquid investable wealth of 1 million US dollars or more.
As these wealthy individuals migrate, they move wealth, expertise and investment which has a direct impact on the economic vitality of both the countries that they are leaving and the countries that they are moving to. Most of these people are not relocating as refugees, so where they are moving from and to can possibly tell us something about their expectations (whether right or wrong) about the attractiveness of these locations in the coming years.
So, let’s look at millionaire migration- where wealthy people are moving from and to, what causes wealthy individuals to migrate and the economic consequences for the countries they leave and arrive in.
So, where are wealthy individuals moving from and moving to? Well, according to Henley & Partners, the top ten countries that millionaires are leaving in 2024 are China, The UK, India, South Korea, Russia, Brazil, South Africa, Taiwan, Nigeria and Vietnam. The top ten countries that millionaires are moving to are: The UAE, The USA, Singapore, Canada, Australia, Italy, Switzerland, Greece, Portugal and Japan.
The country most millionaires are leaving is China, which is only so surprising given the countries population. While that may be an important factor, the number of wealthy emigrants from China represents a new record outflow. According to Henley, general wealth growth in China has been slowing over the past few years, which means that these outflows could be more damaging than usual. Popular destinations for millionaires leaving China traditionally include Singapore, the USA, and Canada, with Japan being a new destination on their list.
The data shows that 9,500 millionaires will leave the UK in 2024, a new record outflow for the country, with London expected to be especially hard hit. According to the research, the top destinations for millionaires leaving the UK include Paris, Dubai, Amsterdam, Monaco, Geneva, Sydney, and Singapore, as well as retirement hotspots like Florida, the Algarve, Malta, and the Italian Riviera.
According to the report, this increase in Britain’s wealthy residents moving abroad is the acceleration of a trend that began around the time of Brexit. From 2017 through until last year, Britain lost 16,500 millionaires to migration. This is a major reversal for a country that historically acted as a magnet for global wealth.
India comes in at number three on the list, which is somewhat surprising as it is currently ranked as the fastest growing economy in the world. While India is expected to lose 4300 millionaires, with many moving to the UAE, these outflows are not particularly concerning as the country continues to produce far more new millionaires than it loses to emigration. The report highlights that the Indian millionaires who move abroad tend to still retain business interests and second homes in the country, possibly driven by capital controls.
It is not unusual for Indian millionaires to live abroad to enjoy a better lifestyle, safer and cleaner environments, and to gain access to more high-end health and education services.
The number of millionaires leaving South Korea has been growing in recent years and once again a record number are expected to leave in 2024. Popular destinations for wealthy South Koreans include the USA, Australia, and Canada.
While Russia comes in at number five on the list, the ongoing sanctions and exchange controls make it both difficult for wealthy individuals to operate from Russia but also to leave Russia. Millionaire outflows from the country peaked in 2022 according to Henley when over 8,500 high net worth individuals left. This year only 1000 are expected to leave.
Russia has seen the largest outflow of millionaires of any country in the world in recent years, with data suggesting that as many as 15,000 millionaires left since the start of the war in Ukraine.
So where are these people all moving to? Well, the top destination is the United Arab Emirates which attracts large numbers of millionaires from India, the Middle East, Russia, and Africa. Large inflows are this year expected to come from the UK.
America’s is always a popular destination for those eligible to move there, and its growing tech dominance is attracting wealthy individuals from all over the world who want to work or invest in this sector according to the report.
Florida’s rise as one of the top retirement destinations for wealthy individuals continues to grow too. It’s not just foreigners that are moving to Florida either. Americans have been moving there too at a record rate, making it the fastest-growing state in America by population, which is all the more surprising as it already has the third-largest population in the country.
According to a survey run by Vox, people say they are moving to Florida for the year-round sunshine, the lack of state individual income tax, and they say that the pandemic created new opportunities for them in the state. Additionally, many retirees who always planned to retire to Florida moved up their timelines in the wake of the pandemic.
Singapore, which is widely regarded as one of the most business-friendly places on earth comes in at number three on the list of places millionaires are moving to. Singapore consistently ranks near the top of lists like this and is additionally the world’s fastest growing family office hub, helped along by the absence of capital gains tax in the city-state.
The number of new family offices established in Singapore grew from 27 in 2018 to 453 in 2021, and prominent multinational family offices are said to be establishing satellite offices in Singapore as a gateway to access investment opportunities in the rest of Asia.
Canada comes in at number four for migrating millionaires, especially those coming from Asia and Europe. Australia then comes in at number five, but the report notes that millionaire inflows for 2024 are well below the peak levels recorded in the 2010s when Australia consistently attracted more than twice as many wealthy migrants per year.
The fact that Britain is at number two on the list of countries that wealthy individuals are leaving is quite a turnaround as London has always been seen as a prime location for the world’s super-rich. From the 1950s through to the early 2000s, Britain saw large swathes of rich families arrive from across mainland Europe, Africa, Asia, and the Middle East.
The fact that it is now the country with the second-highest projected outflow of millionaires is really the big headline from this story. The UK is projected to lose 9,500 of its high-net-worth individual population this year which is more than double the 4,200 lost last year. Over 7% of the millionaires expected to move country in 2024 will be choosing to depart the UK. A rather grim statistic for the country.
According to Dr. Hannah White of the Institute for Government, the UK is one of only three countries in the Top 15 global wealth ranking to have seen a net loss in high-net-worth residents over the last ten years. The other two are Japan and Hong Kong – China.
White says that these figures reflect a steady accumulation of factors detracting from the UK’s appeal to high-net-worth individuals. The hangover from Brexit continues to be felt, with the City of London no longer seen as the financial center of the world. The war in Ukraine and resulting energy crisis hit the UK worse than any other country in Western Europe, according to the IMF, because of the country’s overreliance on Russian gas. The consequent rise in inflation continues to impact considerably on the cost of living in the UK.
She highlights that the impact of external factors on the economic situation has been compounded by significant political turmoil — with three Conservative prime ministers taking power in quick succession in the second half of 2022. She says that this domestic instability, accompanied by a lack of policy space to address the structural factors impeding the UK economy has contributed to an uncertain investment climate.
When wealthy individuals leave a country, the country suffers as its tax base falls. Additionally, businesses that cater to these individuals suffer due to lower demand. So what is causing wealthy individuals to migrate in 2024?
According to the law firm Penningtons, geopolitical threats are high on the list of reasons that cause wealthy individuals to move abroad. They say that the war in Ukraine and the ever-changing relationship between China and the West are pushing wealthy individuals to reconsider the safest places in which to base both their families and their wealth. Other factors that affect individuals’ decisions to relocate are personal security and applicable immigration and tax rules.
A 2022 paper from the European Journal of Political Economy analyzed why people from wealthy countries migrate and found that differences in quality of political and economic institutions significantly impact migration between OECD nations.
According to the study, political institutions are more important than economic institutions and countries with effective institutions have inclusive and accountable governments and active civil societies that encourage trust by promoting the rule of law, freedom of press and equitable policies, among others.
A paper from The London School of Economics published this January argues that the vast majority of Britain’s extremely wealthy people would never leave the country for tax reasons, partly due to the stigma involved in doing so.
The paper was based on in-depth interviews with 35 wealthy British citizens, mostly based in London.
The interviewees said that the most important factor driving their reluctance to migrate was their attachment to London’s unparalleled cultural infrastructure, private health services and private schools, along with the ability to maintain key social ties.
They also expressed concern about career risks, the administrative burden of moving and familial upheaval, along with a strong attachment to British culture and values.
It is however possible that what people say in interviews is different to how they actually behave in real life.
The paper reports that many were concerned that top tax rates in the UK were currently too high and would rise further and some said they would not rule out tax migration but only if the political and economic conditions in Britain changed dramatically. A return to top tax rates seen in the 1970s or a Jeremy Corbyn-style government were frequently cited as ‘red-line’ conditions.
A paper by Andres Solimano called global mobility of the wealthy and their assets found that 43% of the worlds millionaires are based in the United States and that given the history of instability and the potential for confiscation in emerging economies and developing countries (either real or imaginary), the wealthy from these countries seek to establish their residence in high income nations and special jurisdictions, helped by the proliferation of investment migration schemes.
Solimano found that high net worth individuals consider personal safety, availability of high-quality health services, favorable tax treatment, protection of wealth, property rights, educational opportunities for their children, visa-free mobility to third countries and cosmopolitan settings and good transport connections when choosing a country to establish residence in.
He found that historically, wealthy individuals have migrated or moved country temporarily for at least four reasons: In response to new opportunities for profit abroad; To enlarge the scope of their work and attain international recognition; To escape from political, religious or ethnic persecution; and to seek to shield their assets from taxation, financial uncertainty and confiscation policies.
Factors which induce the rich (and to some extent, the upper middle class) to leave their home countries either on a permanent or temporary basis include factors such as economic insecurity, cumbersome taxation systems, lack of adequate protection of property rights, political uncertainty, austerity policies, depressed asset prices, violence and terrorism.
A paper by Peter Hall of the University of New South Wales analyzed the locational choices of skilled scientific and technological knowledge workers to understand why brain drains occur, should countries worry about them and if government policy – in particular R&D policy – makes a difference to migration flows?
He found that scientific workers were influenced by international income differentials in making location decisions – but that they were also sensitive to the long-term prospects of being able to study the problems that they find interesting. He argues that this is both a warning and an opportunity for governments interested in attracting and keeping these workers. He found that increasing total government R&D spending does raise wages and attract these workers. But he found when comparing Germany to the United States that the visibly deregulated labor market in the United States allowed for greater career-long flexibility allowing researchers to move between interesting projects which was more attractive to these workers than the similarly well paid – but longer-term employment contracts required by law in Germany that can limit movement – even within a firm. It appears that flexibility matters as much as pay in attracting and keeping highly skilled workers.
While migration can be politically sensitive, an OECD study released this week shows that the average number of children per woman across the 38 most industrialized countries has fallen from 3.3 in 1960 to 1.5 in 2022 which is below the “replacement level” of 2.1 where a country’s population is considered to be stable.
The paper warns that this lower birth rate could have large effects on economic growth and prosperity in the developed world and thus that immigration into these countries will be needed in the coming years.
When combined with the fact that people are living longer than ever before, these ageing populations can be expected to put pressure on public finances as there are fewer workers paying taxes and supporting retirees. The Great Demographic Reversal by Goodhart and Pradhan argues that a skewed ratio of consumers to workers in a society is also likely to lead to inflation.
With a UK election coming in under two weeks, opinion polls show that migration is one of the biggest issues concerning voters. Rishi Sunak has come under pressure from some of his party to meet a Conservative pledge to slash net migration to Britain.
Economists, however are warning that delivering on this pledge could have serious consequences for the economy.
Net migration to the UK fell 10 per cent last year, but inflows are still well above historical averages according to the Office for National Statistics.
The number of international students signing up to study at UK universities has declined 57 per cent year on year as of this May after Rishi Sunak put restrictions in place on education visas.
University leaders have argued that these visa restrictions will harm British Universities who rely on foreign student fee income for more than a fifth of their revenues. This is a big deal as foreign students pay much higher fees than domestic students, and their disappearance will hurt university funding. A letter signed by business leaders warned that reducing the talent pool available to hire within the UK by reducing student visas would harm their ability to grow their businesses and invest further in the UK.
As hot of a political topic as migration can be, Ian Goldin of Oxford university wrote in his book The Shortest History of Migration that given the increase in the global population, the percentage share of people on the move has barely changed over the years.
Migration can be quite a struggle for those who move country and is not usually a decision taken lightly. Even the millionaires being discussed can find themselves struggling to do as well as they had done at home once they no longer have the same access to business networks that took them years to cultivate.
Data from the EU’s labor force survey found that nearly half of all migrants with degrees work in roles they are overqualified for, compared with less than a third of native workers. Despite high demand for highly skilled workers, migrants with degrees are also unemployed at nearly double the rate of native workers, this is often driven by a lack of recognition of their foreign qualifications.
It is difficult to know what to make of all of this data. An FT piece by Janan Ganesh this week highlights how politicians can misread public opinion, and this can lead to policy decisions that make no sense at all.
In his article he argues that people falsely blamed the rise of populist ideas in the US and UK in 2016 on their belief that free market economies had been allowed to run wild.
He points out that recent European elections show that there is no relationship between a country’s exposure to market forces and its degree of populist anger. The hard right is flourishing in social democracies and in more market-centered ones; in regions that are poorer than their nation’s average, such as the German east, and in regions that are much richer, such as the Italian north; in countries that have experienced government cuts (like Britain) and in ones that have spent at will (like the US); in places where manufacturing has collapsed over the decades like in Britain and the US and in places where it hasn’t like in Germany.
He argues that the belief amongst Democrats in the United States that neoliberalism had led to the election of Trump caused the current administration to believe that America wanted or needed a statist economic transformation, which led to huge government spending which only ended up implicating Biden for inflation.
The data shows that on the eve of the pandemic, economic confidence was at a high in the United States and satisfaction with the “way things are going in the US” was where it was in the mid-1990s and mid-2000s, there was no groundswell of populist anger that had to be dealt with.
Janan points out that Trump emerged after Obamacare and the bank bailouts: two of the largest federal interventions in private economic life since LBJ. Trumps precursor being the Tea Party, whose grievance was too much government, not too little.
The problem with reading too much into news reports of anger over immigration is that these news reports (which are often just driven by the need to sell papers) can cause knee jerk political responses that are not beneficial to the nation in question. Countries need to carefully think through their immigration policies in order to balance their demographics and attract workers with the skills needed by employers. This needs to be done sensibly rather than being driven by leaders who feel they have to make big changes whether right or wrong in order to satisfy an angry mob that doesn’t really exist.
According to the IMF, the foreign-born labor force in the United States is 9% higher today than it was at the start of 2019 and this increase in the number of workers means that the US economy is now expected to be 2% larger over the next decade than had previously been forecast.
The Economist argues that this influx of new workers helps explain the country’s strong economic growth, but that immigration’s impact goes beyond its effect on GDP — it extends to things like inflation, the cost of housing, living standards, the availability of school places and government budgets. All of these things need to be considered together - to come up with sensible immigration policies.
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