Friday, 28 March 2014

UK Sectoral Balances and Private Debt Levels - Q4 2013

Once again very little change in government investment as it strains to keep the economy moving forward. There's been a great deal of talk about the state of the external sector - but you have to remember that somebody has to want to save in Sterling for that to occur. The trade will not complete otherwise. The UK is stable and appears to be moving forward. It's time we understood that rock solid stability and a thousand years of continuity is very valuable to people living elsewhere in the world.
The household sector continues to be negative. The gross debt 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 - as does the external sector.

And the private debt levels:
As with last quarter the GDP increase has brought down the ratio. However if you look at the underlying figures, the overall amount of private debt is going down in nominal terms - driven by debt repayment in the corporate sector. So whatever profit was being generated was being destroyed in debt repayment. Although deleveraging is of course to be welcomed, it looks like it is being driven by dissaving amongst households. And that probably won't last.

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).