Cat Cunningham examines how the super-rich such as Jeff Bezos, have profited during the pandemic while others struggle.
Photo by Watcharlie
Despite significant economic downturn as a result of the Coronavirus pandemic, more than three quarters of the world’s richest population have reported an increase in their already vast fortunes.
Research has found that the super-rich appear to have been able to navigate their way through 2020’s rocky financial markets, whilst the less wealthy have been faced with unemployment, pay cuts and a collapse in the value of their savings and pensions.
93 out of 121 family offices surveyed by Swiss Bank UBS said that they had managed to hit or exceed their financial objectives from January to May this year, at the height of the pandemic. This success is in complete contrast to an economic climate in which many countries are experiencing the worst economic downturn they have faced in decades, and hundreds of millions of people could be pushed into poverty as a result.
Jeff Bezos, Amazon founder and the world’s richest person, managed to increase his fortune by an additional $13bn (£10bn) in a single day to take his personal wealth to an unprecedented $197bn. This gives him a value worth more than that of Britains biggest company, pharmaceutical giant AstraZeneca, which is valued on the stock exchange at £121bn.
Amazon’s Lockdown Success
Whilst most businesses have faced economic turmoil in recent months, Amazon’s share prices have increased by 70% since the start of the year. Hundreds of millions of people have turned to the online delivery giant to keep themselves fed and entertained during lockdown, resulting in this significant boost in share prices.
Amazon is not alone in profiting from the pandemic. Oxfam have estimated that 17 of the top 25 most profitable US corporations, including Microsoft, Johnson & Johnson, Facebook, Pfizer, and Visa, are expected to make almost $85 billion more in 2020 super-profits compared to previous years. As things stand, this success will not be handed out to worker’s wages, nor will it be used to pay more in taxes to fund healthcare. Instead, it will be paid to shareholders – those who are already mega-rich.
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A Time for Saving
As well as avoiding any serious financial damage to their businesses, data shows that the richest 20% of the UK’s population have managed to save a total of £23 billion since March as a result of reduced outgoings. Lockdown saw luxury shops closed and extravagant holidays cancelled,allowing the wealthy to make significant savings over the past few months.
In contrast, people with an annual income below £20,000 are most likely to have reported a loss of income during lockdown according to the UK's Office for National Statistics. Households in the poorest fifth of the country have been hit the hardest with a fall in their median earnings of around 15%- the equivalent of around £160 a month. In addition, most lower income households have been forced to run their savings down, and have been forced to resort to high-interest credit.
Problems on the Horizon
Further problems are likely to occur if the rich continue to save money as the corona-crisis continues, as it is businesses catering to the wealthy that have been hardest hit. Many low-income employees have been laid off with job cuts being made at Bentley, Aston Martin and Mulberry. It appears the world’s wealthy are taking a cautionary approach to spending, choosing to rein in excess spending as work and social gatherings are limited. Sadly, if the wealthy don’t start spending again, inequality will rise as the rich will remain rich, whilst the rest of the world will stay the same or even become worse-off.
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