Tuesday , August 14 2018
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Brexit: Millionaires jump ship

Image: Tiocfaidh ár lá 1916

Both sides of the Brexit have economic forecasts that show just how good/bad things are going to be when somebody finally figures out what leaving the European Union actually means.  But that’s the trouble with forecasts – you only get to find out how good/bad it actually is when it is too late.

A more useful indicator of Britain’s likely trajectory after Brexit may be found by following the money.  As Ruchir Sharma at the New York Times explains:

“Tracking the rich has become a voyeuristic global industry, a form of celebrity worship. But it can also provide serious clues about where countries are headed.

“When a country begins to fall into economic and political difficulty, wealthy people are often the first to ship their money to safer havens abroad. The rich don’t always emigrate along with their money, but when they do, it is an even more telling sign of trouble.”

Using data compiled by New World Wealth, Sharma shows that countries experiencing severe economic and political shocks tend to experience emigration of their wealthiest citizens.  This loss of millionaires and their money is inevitably followed by economic failure and currency devaluation.  Sharma points to two obvious examples:

“In 2017, the largest exoduses came out of Turkey (where a stunning 12 percent of the millionaire population emigrated) and Venezuela. As if on cue, the Turkish lira is now in a free fall.”

Alarmingly for anyone who thinks a Brexit settlement of any kind will usher in a new age of prosperity for the UK, it turns out that millionaires have been exiting Britain like the proverbial rodents leaping off the sinking ship:

“Britain and France appeared to be trading places as magnets for wealth. For decades the rich had been drawn to Britain by circumspect banks, loose regulations and the comforts of London. Until 2016, Britain had a sizable influx of millionaires every year, but the flow suddenly reversed last year with a net exodus of 3,000, amid fears that as Britain exits the European Union, London will fade as a financial capital. It did not help that in 2017 the government raised taxes on foreigners who buy property.”

If there is any benefit to be had from Brexit, it is only that Britain may be – to paraphrase John Michael Greer – getting its collapse in early to avoid the rush.  With Italy in political and economic freefall and Deutsche Bank teetering at the centre of what looks likely to be the next global financial crisis, Britain may yet prove to be merely the first European state to slip into permanent economic decline… it will likely not be the last.

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