Wealth inequality is very much evident across the world, and Europe is no exception: the wealthiest 10% on the continent own a staggering 67% of the wealth, while the bottom half of adults possess only 1.2% of it.
The extent to which wealth is unevenly distributed varies considerably from country to country too, as shown by Credit Suisse and UBS's Global Wealth Report 2023.
Net worth or “wealth” is defined as the value of financial assets plus real assets (principally housing) that households own, minus their debts.
Its unequal distribution is measured by the Gini coefficient and the share of the top percentiles: the higher the Gini coefficient, the more wealth inequality there is, with 0 representing complete equality.
Among the 36 European countries studied, wealth inequality in 2022 ranged from 50.8 in Slovakia to 87.4 in Sweden.
Excluding Iceland, wealth inequality was fairly high across the Nordic countries. Finland, Denmark, Norway and Sweden all came in the top half of the table, with Sweden topping the list altogether.
Germany had the highest wealth inequality score (77.2) among the EU’s ‘big four’ economic powers, followed by France (70.3), Spain (68.3) and Italy (67.8). The UK, a former EU member still considered one of the ‘big four’ within the continent of Europe, had a score of 70.2.
Belgium (59.6), Malta (60.9) and Slovenia (64.4) followed Slovakia in having the least wealth inequality.
Huge disparities among the richest
Across 21 European countries with available data, significant wealth disparities exist among the top percentiles, including the richest decile, top 5%, and top 1%.
Looking at the richest decile in 2022, Sweden had the highest wealth inequality, where the top 10% owned 74.4% of the wealth. Belgium had the lowest inequality value at 43.5%.
In fact, the richest decile owned over half of the wealth in every country except for Belgium.
Among the EU’s ‘big four’, Germany had the highest wealth inequality, where the richest 10% owned 63% of the wealth, followed by France (54.9%), Spain (53.8%) and Italy (53.5%). The UK had a lower figure than all these four countries at 53.3%.
Excluding Germany, the richest decile in Europe's four economic powerhouses had comparatively lower inequality figures among the 21 countries.
Sweden soars, Belgium bucks the trend
The ranking remains largely unchanged when comparing the top 5% wealth share to the top 10%. Sweden maintained its top position, with the richest 5% owning 60.3% of the wealth, while Belgium had the lowest wealth inequality, with the top 5% holding 30.8% of the wealth.
Looking at the share of the top 1%, Turkey had the highest figure at 39.5%, followed by Czechia (37.8%), Sweden (35.8%) and Germany (30.%).
The share of the top 1% in Belgium was far lower than the average, with the richest top 1% owning only 13.5% of the wealth there. The next lowest figure was 19% in Portugal.
Why is Sweden at the top of wealth inequality?
It might be a surprise to see the Nordic countries in general scoring so highly for wealth inequality, especially as they seem to perform very well in other indices, such as welfare, disposable income and democratic values.
The tax system is the most significant reason why Sweden in particular goes against the grain here, according to Dr Lisa Pelling, the head of Stockholm-based think tank Arena Idé.
“We have during the past decades abolished a number of taxes on wealth,” she told Euronews Business. “In Sweden, at the moment there is no wealth tax. There is also no tax on inheritance, gifts and property.”
She said that successful international Swedish companies, which have benefitted from investments that have been made with taxpayers’ money, are not paying back those funds.
“We also have very low taxes on companies. This means that there are a lot of possibilities for rich people to get even more rich,” Pelling added.
Welfare system: People feel safe
Pelling underlined that Sweden is still one of the most equal countries in the world in other aspects, particularly when it comes to income.
“This is mainly due to the fact that we have a well-developed welfare system where people feel safe about the public healthcare system and people feel relatively comfortable with their pensions, with their insurance when it comes to sick leave and unemployment,” she said. As such, people have fewer incentives to put money to one side for these things.
Compared to other Nordic countries with effective welfare systems, Pelling noted that the key difference lies in the tax system.
In Finland, schools are state-owned and operated, while in Sweden, a third of upper secondary school students attend private schools. These schools, largely for-profit, receive full state funding without restrictions on their profit margins, she said.
The same is true of the healthcare system. “Primary care is largely privatised, and it is very profitable. The privatised tax-funded welfare companies make their owners very wealthy,” Pelling said.
Factors behind wealth inequality within Europe
Looking at Europe more broadly, one of the most important factors in wealth inequality is asset composition, according to Eszter Sándor and Dr Carlos Vacas‑Soriano, research managers at the European Foundation for the Improvement of Living and Working Conditions (Eurofound).
Homeownership rates between countries in particular are one of the main factors contributing to differences in wealth distribution.
“Countries with higher levels of home ownership tend to have lower levels of wealth inequality, while countries where access to other financial assets is more prevalent, tend to have higher wealth inequality,” the researchers told Euronews Business.
Sándor and Vacas‑Soriano also said that voluntary pensions and life insurance play an important role in wealth inequalities.
“In Western European countries, people are more likely to be able to save for their retirement, both because they have higher income, and because they have better access to voluntary instruments for income after retirement than eastern and southern European citizens,” they said.
Germany: Few homeowners, no wealth tax
Turning to the fact that Germany, a country with a strong economic track record, scored highly in wealth inequality, Sándor and Vacas‑Soriano highlighted that there is no wealth tax there.
“Germany has a high proportion of renters, but they have very low effort rates (housing expenses divided by income) compared with other Western European countries due to heavily regulated rental markets and a comparatively larger housing supply,” they said.
In 2022, Germany had the lowest shares of homeownership, where only 46.5% of the population lived in a household owning their home, according to Eurostat. The EU average was 69.1%. This share was also lower than the EU average in Sweden (64.2%) and Turkey (57.5%)
Has wealth inequality improved anywhere?
Among the major European countries, namely the EU's ‘big four’ and the UK, wealth inequality, as reflected by the Gini coefficient, actually fell in Germany (-4.3) between 2000 and 2022.
However, it still had the highest score of wealth inequality out of the five of them in 2022.
The UK also saw a fall in inequality over the same period, although less significant (-0.4).
Italy meanwhile recorded the highest rise at 7.4 points, while it increased by 2.8 in Spain and 0.6 in France.
Between 2000 and 2022, France experienced the most notable improvement in the wealth share of the top 1% among these five countries, with a decrease of 4.3 points. Spain and the UK also saw decreases, with declines of 1.7 and 1.4 points respectively.
In Germany and Italy, the richest top 1% increased their wealth shares by around 1 point.
The figures suggest that there's not been any major improvement in the unequal distribution of wealth in Europe's major countries in the past two decades.
