European Wealth Report
Wealth is relevant to all Europeans. This is especially true in the context of the COVID pandemic, as governments were forced to shut down large parts of their economies, causing many people to lose their jobs. In this context, people with savings and higher levels of personal wealth were less severely affected than people solely dependent on their monthly incomes. This precarious economic impact of the 2020 pandemic is perhaps best illustrated by the consideration that Europe’s -6.4% GDP contraction in 2020 is juxtaposed with an increase of net wealth by 3.9%, as expansive monetary policies pushed asset prices higher to soften the impact on the real economy.
Notably, net wealth is not just about asset prices (both real and financial). Net wealth also considers the liabilities a household carries. So, if the household owns more than it owes, it has a positive net wealth. However, if a household needed to rely on bank loans to get through the pandemic, this household’s net wealth could fall or even turn negative. In this way, net wealth offers us a valuable snapshot of a household’s financial balance sheet – and health.
The pandemic has had a disruptive effect on many European economies. For this reason, we at Redesigning Financial Services have decided to explore in more detail the impact the pandemic has had on net wealth in Europe – and the growing concentration of European wealth. Moving further into the 21st century, it will be critical that business leaders, policymakers, wealth holders, and entrepreneurs work together to nurture an environment where the active exchange of ideas forms the bedrock of social progress in Europe.
We hope that this report will offer our readers some interesting new perspectives on wealth in Europe.