The richest in Europe | The richest in the world

Even as the storm clouds gather, Britain’s super-rich have never been richer. Collectively the 1,000 multimillionaires in The Sunday Times Rich List are now worth more than £412.8 billion, up nearly £53 billion on last year. This is a handsome 14.7% rise, yet it is lower than last year when the increase nudged an extraordinary 20%.

But the super-rich have also never faced a combination of such economic and political problems as they do today. These range from the credit crunch, stock market turmoil and a looming property crash to a government looking at their tax affairs as never before.

Until now, the 11 years of Labour government have proved a boon for the super-rich, rarely seen before in modern British history. When the Blair administration came to power in 1997, the wealth of the richest 1,000 stood at a mere £98.99 billion. The near £314 billion rise in their wealth represents a 317% increase during the Labour years.

However, much of the rise in this year’s wealth can be attributed to one factor: the number of foreign rich who have made London or its environs their main home and base of operation. This year we have 75 billionaires here, up from 68 in 2007. But 40 of the 75 come from countries such as Israel, Germany, Russia and India, as well as Scandanavia. Of the top 10, only three were born in Britain. It is the foreign-born billionaires who are also getting richer quicker. Indian steel tycoon Lakshmi Mittal, our No 1 again, has seen his wealth increase by nearly 44% in a year to £27.7 billion, largely the result of a successful merger which created the world’s largest steel company.

By contrast, many of the British-born rich have seen their fortunes clipped back as the economic outlook worsens. Sir Philip Green may be based in Monaco, but his wealth is firmly based on the British high street. With retail gloom prevalent, we have clipped him back to £4.33 billion. Similarly, Sir Richard Branson is down £400m at £2.7 billion largely as a result of the falling share price of Virgin Media.

The speed with which businesses can collapse in the current stock market climate and the prevailing credit crunch can take its toll on even the smartest financiers. Joe Lewis, the East End-born but Bahamas-based entrepreneur, lost £500m on the recent overnight collapse of the American bank, Bear Sterns, though such is his wealth that he hardly noticed the loss.

The wealth explosion among the super-rich in recent times has not been confined to Britain. But whereas we used to lead the field with the near-20% annual growth rates, our 14.7% increase this year seems positively pedestrian. The richest 50 in the world are now worth a staggering £723.4 billion (see page 56), which represents a 22.6% increase on a year ago. Europe is doing even better: the richest 50 there are now worth £464.9 billion, up 26.6% on last year.

It is little wonder that the amount of tax being paid by the rich or their use of tax havens to shelter their wealth has recently become a hot political issue globally. Indeed cynics could argue that the super-rich have become a convenient target for governments trying to grapple with the credit crunch which many blame on overpaid super-rich bankers and financiers taking disastrous risks. Thus we have had the spectacle recently of Angela Merkel, the German chancellor, leading a determined assault on European tax havens such as Liechtenstein.

Our own government has also started to make life more difficult for the rich after years of benign noninterference. The foreign billionaires who make London their home, using the so-called nondomicile rules whereby their overseas investments are not taxed, are likely to face an annual £30,000 charge for the privilege of living here. Thus far the mere threat of change has had no effect on the super-rich we deal with. Indeed the numbers coming to Britain or those we have unearthed has actually risen.

But it is not just the Russian, Scandinavian or Indian rich in London who are in the government’s sights. Changes to the capital-gains tax regime enacted earlier this month effectively push the tax bill on company sales or share sales from 10% to 18%. This resulted in a flood of sales or share transfers within super-wealthy families such as the Sainsbury and Morrison grocery clans to quite legitimately mitigate the effect of the rise at the end of the last tax year. The only people who got richer as a result were the tax lawyers and accountants working overtime to complete deals in time. These share movements had little actual impact on the wealth of those concerned.

The credit crunch which began last August with banks freezing lending as they uncovered huge bad debts on their books spread fear and uncertainty to the stock market. Many of our home-grown millionaires with stakes in quoted companies have been badly bruised as a result with their share prices down 30% or more on last year.

Property is also feeling the heat. House prices are beginning to fall and the commercial property market assets are being marked down in value. It is early days yet but we have taken an axe to many of the values of our property tycoons.

Despite this, the property tycoons and landowners still make up the biggest group in The Sunday Times Rich List 1,000. This year we have 231, up from the 221 of last year. The warning signs are there though with the number of construction millionaires, who are heavily dependent on the housing market, down this year from 64 to 50.

The City has, of course, been a giant milch cow for the past few years, providing huge tax revenues to the government as it prospered on the back of a takeover boom. The rise of hedge funds and private equity companies investing in new financial products or taking over venerable industrial giants made London the centre of the financial universe. It was fine while it lasted but now the mood is one of deep gloom and talk of a jobs cull. Our list, though, still shows a rise in rich financiers to 167 this year (against 155 last year). It would have been higher but we pruned a handful whose hedge funds had shown signs of distress or simply closed. Confidence in hedge funds can collapse overnight, shredding the wealth of the former stars instantly. We suspect that next year’s list may look very different because of the growing gloom.

One bright spot amid this gloom is the rise of industrial fortunes in Britain. Last year we had 106 millionaires in engineering, metal bashing or steel. This year it has jumped to 114 as small niche companies find it easier to compete globally with the fall in sterling’s value.

The continuing influx of foreign rich to Britain has helped lift our threshold for entry to the top 1,000 this year from £70m to a record £80m. In our first list in 1989, an £80m fortune meant a position of number 83= in the list of the top 200 we then recorded. Number 83= that year at £80m was Paul McCartney.

Recently there has been extraordinary attention on Sir Paul’s wealth in the high-profile divorce action at the High Court involving his estranged wife Heather Mills. The judge reckoned McCartney was worth £400m, considerably lower than our recent valuations of £825m. However, we do not go as low as the judge this year and put McCartney at £500m. In 2008, it is Charles Dunstone of Carphone Warehouse fame who is ranked 83 with a £904m fortune, 11 times more than the 1989 equivalent position.

In the regional stakes, no area can match London and the southeast economy for millionaire creation. Of the top 1,000, 536 are from there, up from 534 last year. But there are encouraging signs in other regions. The number of Scots has risen from 65 to 68. Sir Tom Hunter remains the only genuine Scots-born billionaire with a £1.05 billion fortune despite his efforts to give it away to charity as a veritable Continued from page 5 modern-day Andrew Carnegie. In all, our 100 richest Scots, on pages 92-93, are now worth £18.54 billion, a rise of £1.59 billion in a year.

The 19 in the top 1,000 from Wales, or Welsh-born, is down from the 25 we had last year and the overall wealth is also down from £6.72 billion to £6.21 billion.

The drop in the euro wealth of Ireland’s richest 250, down from €67.03 billion last year to €61.14 billion this, perhaps should serve as a warning for Britain that the upward trend in the valuation of the super-rich is not guaranteed. However, the money needed to make the richest 250 rises modestly year on year from €48m to €51m. The Irish list, from pages 95 to 104, is a unique look at an all-Ireland economy and recognises no borders. The number of Irish billionaires continues to rise with Sean Quinn, the Co Fermanagh-based aggregates to insurance tycoon, seeing his wealth rise by €101m to €4.722 billion, now making him the richest in Ireland.

The number of women in the top 1,000 has increased this year to a record 94 despite the higher bottom line figure. We have a new richest woman in the shape of Kirsty Bertarelli, a former Miss United Kingdom, who is married to Swiss biotech entrepreneur, Ernesto Bertarelli. Their combined fortune is £5.65 billion. Encouragingly there are a good number of women included who have built up their own businesses such as Julia Davey, one of London’s most successful property entrepreneurs.

The top 100 in the young rich list of those aged 30 and under is still dominated by the worlds of fashion, film, football, motor racing and pop. In all, 60 of the top 100 are drawn from these celebrity-obsessed worlds. There are 25 footballers, led by England striker Michael Owen. All but three of our footballers are drawn from the elite clubs as present or past players: Chelsea, Manchester United, Arsenal and Liverpool. Motor racing is also beginning to make its presence felt. Accompanying Jenson Button we have Lewis Hamilton, the new hope for British Formula One, and Dan Wheldon, the king of America’s IndyCar racing circuit. Music and modelling are the routes to fortune for young women. Among them are troubled singer Amy Winehouse and supermodel Lily Cole.

But for all the emphasis on glamour and celebrity in the young rich, we see some exciting young business tycoons emerging. The Gower brothers, Andrew and Paul, creators of the hugely successful online game, Runescape, have seen profits soar at their company, Jagex, which has propelled them into the top 1,000 with a £109m fortune. Inheritance also provides new members of the young and main rich lists in the shape of Arthur Landon, who inherited a chunky fortune from his late father, Brigadier Tim Landon. Better known, the late Paul Raymond’s property to top-shelf magazine fortune will go to his granddaughters, Fawn and India Rose James, who make their debut at a conservative £150m. Fortunately for the notion of a more meritocratic Britain, the number of self-made millionaires continues to rise. This year we have 762 out of the 1,000.

But as we celebrate our 20th Rich List this year, it is clear that the economic climate may be difficult in the next few years. Gordon Brown, resident in 10 Downing Street for less than a year, will have to take some difficult decisions over the treatment of the rich who have done so well out of Labour. In times of economic uncertainty, the gulf between rich and poor is rarely ignored by those looking for a convenient scapegoat.

Fortunately, many of the enlightened rich recognise that they have a duty to use their wealth to help society. This year we have seen a huge increase in the donations by the rich to charitable causes. Giving among the 30 most generous philanthropists in the Rich List is up by 96% compared to last year, rising from £1.21 billion to £2.38 billion. Our Giving List on pages 8 to 10 shows just who is giving how much to what cause.

Plans to tap the nondomiciles may prove tricky. Brown and his chancellor will have to weigh up the effect on the London economy if the rich decamp to Geneva (which is courting them assiduously) against a growing resentment of the rich in general. We will almost certainly feel the effect in a future list if some of the foreign-born billionaires who grace our pages flee these shores for more congenial pastures.