Sunday, 22 December 2013

UK Sectoral Balances and Private Debt Levels - Q3 2013

The automatic stabilisers are still operating at full strain, with little overall change in government investment over the last few quarters
The household sector has dropped negative for the first time since 2009. The gross figures below tend to suggest that this is due to running down of saving rather than any increase in the take up of debt. The non-financial sector continues to save vast sums.

And the private debt levels:
The increase in GDP has brought down the ratio of debt to GDP across all the sectors.

Update: Bill Mitchell has a review of Q3 2013 over on his blog, which adds more detail.

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).


googleheim said...

These graphs show very easily how a government deficit is a real economy private sector surplus.

It also shows very clearly how a government surplus ( i.e. balancing the budget ) is a real economy deficit leading to less savings and more reliance on credit probably.

The the inversion points where the private sector is in deficit is followed by whimsical efforts to get people easy money and forget principles.

Anonymous said...


I'm trying to understand the distinction between the definition of household financial balances as shown in your graphs and the household savings ratio. Is there a quick and easy explanation !!? Thanks

Neil Wilson said...

It's the difference between Gross Saving and Net Saving.

The Savings Ratio is calculated using the Gross Savings level (sequence RPQL) as a percentage total available resources - including increases in pension funds (sequence RPQK).

The sectoral balances uses Net Savings.

The difference is mostly spending on fixed capital formation (things like cars, furniture, and of course housing - stuff that is used over several years).

So for Q3, Gross saving was £15,655 million, whereas Net Saving was -£295 million, representing a gross fixed capital formation of about £16 million.

Neil Wilson said...

A slightly less technical way of looking at it is that the household savings ratio includes all your savings - real and financial.

So it includes the amount you've 'saved' in your house this quarter.

Whereas the net savings value just looks at the financial savings.

And that is what most people call savings.

Except Daily Express readers of course.

Anonymous said...

Thanks, that's very succinct and helpful

Nell said...

Just wanted to say Happy New Year and look forward to your comments on the various blogs you visit.