Saturday, 29 June 2013

UK Sectoral Balances and Private Debt Levels - Q1 2013

Overall the non-government sector is saving to excess driving the government deficit - largely via the automatic stabilisers. Note the continued rise in the external sector balance.
The five sector chart shows that households are no longer saving at all, and the financial sector is back to net lending - however that may still be an artifact of the Post Office pension fund transfer.

If you look deeper into the figures you find that the Household Savings Ratio has gone down, and that the level of 'Household Fixed Capital Formation' has gone up which has pushed the household sector back into a net-borrowing position.

In English that means we're running down savings and buying houses again. That hasn't yet translated into a sustained increase in the leverage ratio of the household sector. We'll have to wait for Q2 to see if that happens.
And finally the private debt levels:
Private debt levels are now definitely going back up. The UK is back on the borrowing drug.

Source: Office of National Statistics, tables RPZD, RPYN, RQAW, RPZT, RQCH, DJDS (Seasonally adjusted Net Lending/Borrowing per sector plus residual error) and YBHA (Gross domestic product at market prices, seasonally adjusted). Private sector debt based on tables J8XI, NLBC, NKZA, NNQC, NNRE, NNXI, NNXM, NNWK, J8XK, NLSY, NLUA, J8XM, NJCS, and NJBQ (Lending, securites and derivatives per sector, not seasonally adjusted) scaled by BKTL (Gross domestic product at market prices, not seasonally adjusted).