UK is now Millionaires Row

Britain has the third largest number of millionaires and London is the second biggest millionaire capital, according to a new study by management consultant the Boston Consulting Group.

Of the 10.7m millionaire households, according to the 52-page report, the UK had 668,000, compared with the US at 4.8m and Japan with more than 900,000.

For the number of super-rich, those households with $5m or more, Britain comes fourth with 54,000 households, behind the US, with 674,000, Japan with 71,000 and China with 64,000.

The study, entitled A Wealth of Opportunities in Turbulent Times, showed that in 2007 the number of millionaire households grew by 11.2 per cent to globally, despite turbulent economic times.

Holding the top spot for the second year running came the US followed by Japan and the UK with Germany and China appearing fourth and fifth respectively.

Furthermore, of the 15 cities ranked by the number of millionaire households, London came second with New York holding the top spot. Two other European cities also made their mark - Paris and Milan - while Osaka and Taipei also appeared.

Despite this, the report predicted the US and European domination was set to be challenged in 2008 by Asia with China expected to overtake Germany and Taiwan expected to surpass Switzerland.

Elsewhere, the report showed financial turmoil had taken its toil on US based assets under management however several European stock markets managed to buck the trend.

Millionaire Households

Source: The Boston Consulting Group

However, it recognised that private banking markets in North America and Europe had been bearing the brunt of the crisis with mainly investment banking divisions having significant exposure to sub-prime related securities.

Other regions such as Japan and the Gulf region had relatively low exposure, in part because their clients preferred more conservative products.

Tax changes have also been impacting on various countries' ability to remain as an offshore haven. This is particularly pertinant for the UK with the controversial new tax imposed by Alistair Darling on non-domiciled residents in the last Budget.

According to the report, traditional offshore private banking centres such as London are now being squeezed with regulatory change posing the "largest threat" to this traditional offshore model.

It said: "Tighter tax codes and stricter banking regulations have caused many investors to shift from offshore to onshore strategies."

It went on to claim that another threat comes from the rise of new offshore banking centres as investors from China, Taiwan and Hong Kong gravitating towards Singapore, which is closer to home, rather than relying on traidtional European havens.

In the same way, the report concluded: "Younger clients in the Middle East frequently use Dubai as an offshore location because they prefer to invest in regional private equity and real estate."