Where in Europe is there the greatest wealth inequality?

Experts suggest that tax systems and property ownership rates play a significant role in wealth disparities between the rich and poor.

Wealth inequality is evident worldwide, and Europe is no exception: the top 10% wealthiest individuals on the continent hold a staggering 67% of the wealth, while the bottom half of the adult population owns just 1.2% of it.

The degree of wealth inequality also varies considerably from country to country, as shown by the Global Wealth Report 2023 from Credit Suisse and UBS.

Wealth or "net worth" is defined as the value of financial assets plus real assets (mostly housing) owned by households, minus their debts.

Its unequal distribution is measured by the Gini coefficient and the percentage of top percentiles: the higher the Gini coefficient, the greater the wealth inequality, 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 quite high in the Nordic countries. Finland, Denmark, Norway, and Sweden all ranked in the top half of the table, with Sweden at the top.

Among the EU's four major economic powers, Germany had the highest wealth inequality (77.2), followed by France (70.3), Spain (68.3), and Italy (67.8). The United Kingdom, a former EU member still considered one of the "big four" of the European continent, scored 70.2.

Belgium (59.6), Malta (60.9), and Slovenia (64.4) followed Slovakia as countries with lower wealth inequality.

  • Large Disparities Among the Wealthiest

Across the 21 European countries with available data, significant wealth disparities exist among the highest percentiles, including the top decile, top 5%, and top 1%.

In analyzing the wealthiest decile in 2022, Sweden had the highest wealth inequality, with the top 10% owning 74.4% of the wealth. Belgium had the lowest inequality, at 43.5%.

In fact, the wealthiest decile held more than half the wealth in all countries, except Belgium.

Among the "big four" of the EU, Germany had the highest wealth inequality, with the top 10% owning 63% of the wealth, followed by France (54.9%), Spain (53.8%), and Italy (53.5%). The United Kingdom had a lower value than all four of these countries, at 53.3%.

Excluding Germany, the wealthiest decile in the four European economic powerhouses shows comparatively lower inequality values among the 21 countries.

  • Sweden Soars, Belgium Bucks the Trend

The ranking remains virtually unchanged when comparing the wealth share of the top 5% with the top 10%. Sweden maintained its top position, with the top 5% owning 60.3% of the wealth, while Belgium reported the lowest wealth inequality, with the top 5% owning 30.8% of the wealth.

As for the percentage of the top 1%, Turkey has the highest value, at 39.5%, followed by the Czech Republic (37.8%), Sweden (35.8%), and Germany (30%).

The percentage of the top 1% in Belgium was much lower than the average, with the wealthiest 1% holding only 13.5% of the country's wealth. The second-lowest value was 19% in Portugal.

  • Why Is Sweden at the Top of Wealth Inequality?

It may come as a surprise to see the Nordic countries, in general, scoring so high in terms of wealth inequality, especially as they seem to perform very well in other indices, such as well-being, disposable income, and democratic values.

According to Dr. Lisa Pelling, director of the think tank Arena Idé, based in Stockholm, the tax system is the most significant reason Sweden, in particular, bucks the trend.

"In recent decades, we've abolished a number of wealth taxes," she told Euronews Business. "In Sweden, there's currently no wealth tax. There's also no inheritance tax, gift tax, or property taxes."

Successful Swedish multinational companies, benefiting from investments made with taxpayers' money, are not returning those funds.

"We also have very low corporate taxes. This means there are many opportunities for wealthy individuals to get even richer," Pelling added.

  • Social Protection System: People Feel Secure

Pelling emphasized that Sweden remains one of the most equal countries in the world in other respects, particularly regarding incomes.

"This is mainly because we have a well-developed social security system, where people feel secure about the public health system and relatively comfortable with their pensions, their sickness insurance, and unemployment insurance," she said. As such, people have less incentive to save money for these things.

Compared to other Nordic countries with effective social security systems, Pelling pointed out that the main difference lies in the tax system.

In Finland, schools are state-owned, whereas in Sweden, one-third of upper secondary school students attend private schools. These schools, mostly for profit, receive full state funding without restrictions on their profit margins.

The same goes for the healthcare system. "Primary care is largely privatized and very profitable. Privatized, tax-funded social insurance companies make their owners very wealthy," said Pelling.

  • Underlying Factors in Wealth Inequality in Europe

According to Eszter Sándor and Dr. Carlos Vacas-Soriano, research managers at the European Foundation for the Improvement of Living and Working Conditions (Eurofound), one of the most important factors in wealth inequality is the composition of assets.

Homeownership rates among countries, in particular, are one of the main contributors to differences in wealth distribution.

"Countries with higher levels of homeownership tend to have lower levels of wealth inequality, whereas countries where access to other financial assets is more prevalent tend to have greater wealth inequality," the researchers told Euronews Business.

Sándor and Vacas-Soriano also stated that voluntary pensions and life insurance play an important role in wealth inequalities.

"In Western European countries, people are more likely to save for retirement, either because they have higher incomes or because they have better access to voluntary post-retirement income instruments, than citizens in Eastern and Southern Europe," they said.

  • Germany: Few Homeowners, No Wealth Tax

Sándor and Vacas-Soriano highlighted that Germany, a country with a solid economic track record, scored high in terms of wealth inequality.

"Germany has a high proportion of tenants, but they have very low housing cost burdens (housing expenses divided by income) compared to other Western European countries due to heavily regulated rental markets and a comparatively larger housing supply," they said.

In 2022, Germany had the lowest homeownership rates, with only 46.5% of the population living in owner-occupied households, according to Eurostat. The EU average was 69.1%. This percentage 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, including the EU's "big four" and the United Kingdom, wealth inequality, as reflected by the Gini coefficient, decreased in Germany (-4.3) between 2000 and 2022.

However, in 2022, Germany still had the highest wealth inequality among the five countries.

The United Kingdom also saw a decline in inequality over the same period, though less significant (-0.4).

Meanwhile, Italy recorded the largest increase, at 7.4 points, while Spain increased by 2.8 and France by 0.6.

Between 2000 and 2022, France saw the most notable improvement in the top 1% wealth share among these five countries, with a decrease of 4.3 points. Spain and the United Kingdom also saw decreases, with declines of 1.7 and 1.4 points, respectively.

In Germany and Italy, the top 1% increased their share of wealth by about 1 point.

The numbers suggest there haven't been significant improvements in the unequal distribution of wealth in Europe's major countries over the past two decades.