With Greek and Italian economies woes grabbing many headlines, there are fresh sources of foreign wealth inflows to London, seen as a safe haven by those in many parts of the world, says Berkeley Law, the private client firm.

More and more high net worth individuals,  especially those from mainland Europe, the Middle East and North Africa, are turning to the UK as they strive to preserve their wealth. Many seek advice about how to relocate their families to a jurisdiction outside of the troubled eurozone and MENA regions, and how they can diversify their wealth out of these regions, according to specialist wealth advisory firm, Berkeley Law.

The eurozone tailspin continues apace, laden as it is with sovereign debt. With Greece and Italy drowning in arrears, European banks are getting dragged into the vortex.  Germany and France are embroiled in crisis talks, hammering out a deal to ensure the recapitalisation of European banks and shoring up both Greek and Italian debt. But given the number of European countries teetering on the brink, how long can the EU afford to do this? The “safer” member nations are skittish at the thought of increasing their contributions to the European Financial Stability Facility - Slovakia for one has recently voted against increasing its contribution.

It’s not just Europe. The US is grappling over the matter of how to deal with unprecedented levels of sovereign debt, an issue which is dominating the agenda in the run up to the 2012 presidential elections.  The political upheaval in the Middle East in 2011 has also contributed to the world’s financial instability. Democracy is winning the day, but it will take time to re-establish the countries’ infrastructures.

Even Switzerland’s position at the top of the financial tree has been shaken.  Famed for its banking system, discretion and tax breaks, Switzerland attracts HNW individuals who seek safety - but for how long?  Swiss banks are not immune to the threat of defaulted sovereign debt. They are also at the mercy of the Swiss franc, the value of which has escalated in response to the capital flight from discredited debt currencies, forcing the Swiss National Bank to take unprecedented measures to rein in its value.

Nor are financials the only area of concern. The Swiss banking sector is in data protection wrangles with the US government, which is trying to retrieve data on US citizens accused of tax dodging who have assets in Swiss banks. A ruling in favour of the US government could change the face of Swiss banking forever. Switzerland and the UK have also just signed a tax treaty allowing for a tax levy, withholding tax and information-sharing in respect of UK-resident Swiss account holders.

So what alternatives do HNW inviduals have?

The UK is emerging as one safe haven in the turbulent seas of the global economy. With its relatively stable currency, solid prime property market, relatively liberal financial markets and stringent measures to rein in its own sovereign debt, the UK is increasingly considered a safe destination. This is not merely wishful thinking.  For example, the Greeks have been flooding into the UK since the cracks began to show in their economy. Wealthy Greeks have been seen to pump £250 million (around $394.6 million) into the London property market in the past year.

The Greek share of prime central London property has trebled to 1.7 per cent in the last two years alone according to industry statistics.

It is not simply financial safety that drives the view of the UK as an attractive destination. Its political stability, highly cosmopolitan capital, excellent schools, convenient time zones and its status as a travel hub have all drawn individuals and families from throughout the world. 

Promotions

With such a great deal to recommend it, the UK government is promoting the UK as a place for high net worth individuals and families to relocate. The last year has seen changes to immigration rules to attract millionaires and entrepreneurs. For HNW individuals looking to relocate, the UK ‘s Tier One (Investor) visas, which allow foreign nationals and their families to reside in the UK, with the possibility of permanent residence and UK passports, on the basis of investing £1million or more, is an attractive option. There is an accelerated route to settlement for those wishing to make a higher investment in the UK and unlike many other visa routes, investors aren’t required to speak English.

There also appear to be no plans to significantly change the "non-dom" and residence rules, which make sure that wealthy individuals and families who invest in or relocate to the UK can ring-fence their non-UK assets from UK tax. Indeed, further liberalisation has been proposed: planned new rules will remove the tax liability that is sometimes triggered by transferring foreign investment to UK investments and will give those who wish to come to do business in the UK reassurance that they will not thereby bring their non-UK wealth into the tax net.

With such benefits, it perhaps comes as no surprise that the UK wealth advisory community has seen a significant uplift in enquiries from HNW individuals, especially those from the Middle East and North Africa this year; many have been seeking advice about how to relocate their families to a jurisdiction outside of the MENA region, and how they can diversify their wealth out of the region.

Fundamentally, people are looking for a safe location for themselves and their assets. The question for many HNW individuals is in which basket should they be putting their eggs?  For all these reasons, the UK could quietly become the world’s new safe haven.