1000 More Euro millionaires is a symptom of a disordered banking sector
In 2015 there were 4,133 €-millionaire bankers in UK. This figure is up 20% on 2,926 the previous year.
In the rest of Europe, the increase was more modest from 934 to 1002 (+7%).
The sharp eyed will gather that we are home to 4,133 of 5,035 €-millionaire bankers in Europe as a whole, that’s 80% of them. I have coloured the chart in gold, as it seemed appropriate.
An alternative fun way of looking at it is as per head of population.
Number of €-millionaire bankers by year:
The European Bankers association who compile the figures headline their report “EBA observes a significant increase of high earners in EU banks”.
The EBA claim that the majority of the increase is down to the relative strength of sterling compared to the Euro in 2015, meaning a lower sterling salary will qualify to be a €-millionaire. Roughly £703,000 a year would make an individual an €-millionaire in that year.
The table below takes the average value of Euro and sterling from HMRC. The shift in the average Euro value between 2013/14 and 2015/16 was between 7 and 8%. So while shifts in the exchange rate make it easier to be an €-millionaire during the period this clearly cannot explain an increase of 20%.
These figures were issued on Thursday, and reported in the Guardian and FT. But we have discussed them on Touchstone before, so this update is for the sake of completeness.
Last year my colleague Geoff Tily examined whether having a lot of €-millionaire bankers improved the performance of the economy (spoiler – it doesn’t).
In the meantime as Ged Nichols General Secretary of the Accord Trade Union for employees in the financial sector reported to the TUC pensions conference last week, Lloyds Banking Group have reduced employee numbers by circa 50% between Jan 2009 and Jan 2017.
Wages for the rest of the population have been stagnant – or close to it – for five successive months, as we experience the longest period of wage depression since the Victorian period. The chart below compares all episodes of real earnings decline from 1854. 2017 corresponds to the tenth year of decline, with the pre-crisis peak not expected to be restored until 2021.
Real earnings, pre-crisis peak =100
As Frances O’Grady put it: “It’s a worrying sign that Britain’s banking sector still has the wrong priorities, and is servicing a culture of excess at the top rather than servicing the economy and giving fair pay to staff at the bottom of the chain.”