Economic and financial developments in the euro area by institutional sector: first quarter 2022

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July 27, 2022

  • Euro area net savings fell to €809 billion over four quarters to the first quarter of 2022, from €824 billion in 2021.
  • The household debt-to-income ratio fell to 96.2% in the first quarter of 2022 from 96.5% a year earlier
  • The debt-to-GDP ratio of non-financial corporations (consolidated measure) fell to 78.8% in the first quarter of 2022, from 82.5% a year earlier

Total euro area economy

Euro area net saving fell to €809 billion (8.0% of euro area net disposable income) in the four quarters to the first quarter of 2022, from €824 billion. euros during the four quarters preceding the previous quarter. Euro area net non-financial investment increased to €577 billion (5.7% of net disposable income), due to higher investment by households and non-financial corporations, while net investment financial corporations and general government remained broadly stable (see Chart 1). .

The euro area’s net lending capacity to the rest of the world fell to €260 billion (vs. €342 billion in the previous quarter), reflecting lower net savings and higher non-financial investment. net financial. The net financing capacity of households fell to 440 billion euros (4.4% of net disposable income, after 5.9% previously). The financing capacity of non-financial companies fell to 237 billion euros (2.4% of net disposable income, after 3.0%) and that of financial companies to 73 billion euros (0.7% of net available, after 0.9%). The reduction in the financing capacity of the private sector as a whole more than offset a drop in the public sector’s financing requirement (-4.9% of net disposable income, after -6.3% previously).

Figure 1. Euro area savings, investment and financing capacity to the rest of the world

(billions of euros, amounts over four quarters)

Sources: ECB and Eurostat.

* Net saving minus net capital transfers to the rest of the world (equals change in net worth due to transactions).

Data on savings, investment and net financing capacity of the euro zone towards the rest of the world (Chart 1)

Households

Household financial investments increased at an annual rate of 3.1% in the first quarter of 2022, compared to 3.5% in the previous quarter. This deceleration is mainly explained by the fall in the growth rates of investments in cash and deposits (4.2%, after 5.0%), in shares and other equity (2.9% after 3.9%) and in life insurance and pension schemes (2.0% after 2.2%) (see table 1 below).

Households are overall net buyers of listed shares. By issuing sector, they were net buyers of listed shares of non-financial companies, insurance companies and the rest of the world (i.e. shares issued by non-euro area residents), while shares of MFIs and other financial institutions were sold, in net terms. Households continued to sell debt securities (in net terms) issued by MFIs, other financial institutions, general government and the rest of the world, while debt securities issued by insurance companies were purchased on a net basis (see Table 2.2. in the appendix).

The household debt-to-income ratio[1] fell from 96.5% in the first quarter of 2021 to 96.2% in the first quarter of 2022. The ratio of household debt to GDP fell from 62.5% in the first quarter of 2021 to 59.3% in the first quarter of 2022 (see graph 2).

Table 1. Financial investments and household financing, main items

(annual growth rates)

Financial operations

2021 Q1

2021 Q2

2021 Q3

2021 Q4

2022 Q1

Financial investment*

4.5

4.2

4.0

3.5

3.1

Currency and deposits

8.2

6.8

6.2

5.0

4.2

Debt securities

-7.4

-9.2

-10.2

-8.8

-6.9

Shares and other equity

3.3

3.3

3.5

3.9

2.9

Life insurance and pension plans

2.3

2.2

2.3

2.2

2.0

Funding**

2.9

3.5

3.9

4.3

5.2

Loans

3.5

4.0

4.0

4.1

4.2

Source: ECB.

* Items not shown include: loans granted, advances on insurance premiums and provisions for claims payable and other debtors.

** Items not presented include: net financial derivative liabilities, pension plans and other accounts payable.

Data on financial investments and household financing (Table 1)

Chart 2. Debt ratio of households and non-financial corporations

(debt as a percentage of GDP)

Source: ECB and Eurostat.

* Outstanding loans, debt securities, trade credits and pension plan liabilities.
** Outstanding loans and debt securities, excluding debt positions between non-financial corporations.
*** Outstanding debt-related liabilities.

Data on the debt ratios of households and non-financial corporations (Chart 2)

Non-financial corporations

Financing of non-financial corporations increased at a higher annual growth rate of 3.2% in the first quarter of 2022, after 3.0% in the previous quarter, following an acceleration in financing from trade credits, loans and debt securities (see Table 2 below). The acceleration in debt financing was explained by the fact that loans from the rest of the world and non-MFI financial corporations increased at higher rates, which more than offset a deceleration in financing via loans from MFIs , intercompany loans and government loans (see table 3.2 in the appendix).

The debt ratio of non-financial corporations to GDP (consolidated measure) decreased to 78.8% in the first quarter of 2022, from 82.5% in the first quarter of 2021; the broader, unconsolidated measure of debt fell from 147.1% to 142.7% (see chart 2).

Table 2. Financial investments and financing of non-financial corporations, main items

(annual growth rates)

Financial operations

2021 Q1

2021 Q2

2021 Q3

2021 Q4

2022 Q1

Funding*

2.1

2.3

2.4

3.0

3.2

Debt securities

10.1

2.2

2.0

5.4

5.8

Loans

3.1

2.8

3.6

4.5

4.7

Shares and other equity

1.4

1.8

1.3

1.3

1.2

Trade credits and advances

-1.3

6.1

8.0

11.5

13.0

Financial investment**

3.9

4.4

4.5

5.2

5.1

Currency and deposits

17.5

8.1

6.7

9.1

8.5

Debt securities

4.4

0.1

-1.8

-5.7

-0.5

Loans

2.5

5.3

6.5

7.4

7.5

Shares and other equity

2.1

2.2

1.7

2.2

2.2

Source: ECB.

* Items not presented include: pension plans, other accounts payable, liabilities net of financial derivatives and deposits.

** Items not presented include: other accounts receivable and advances on insurance premiums and provisions for claims payable.

Data on financial investments and financing of non-financial corporations (table 2)


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Remarks

  • These data come from a second release of the quarterly euro area sector accounts from the European Central Bank (ECB) and Eurostat, the statistical office of the European Union. This release incorporates revisions and supplemented data for all sectors compared to the first quarterly publication on “euro area households and non-financial corporations” of 5 July 2022.
  • Debt-to-GDP (or debt-to-income) ratios are calculated as the stock of debt in the reference quarter divided by the sum of GDP (or income) for the four quarters up to the reference quarter. The ratio of non-financial transactions (eg savings) as a percentage of income or GDP is calculated as the sum of the four quarters relative to the reference quarter for the numerator and the denominator.
  • The annual growth rate of non-financial transactions and the stock of assets and liabilities (stocks) is calculated as the percentage change between the value of a given quarter and that recorded four quarters earlier. The annual growth rates used for financial transactions refer to the total value of transactions during the year compared to the outstanding amount of the previous year.
  • Hyperlinks in the main body of the statistical release lead to data that may change with subsequent releases as a result of revisions. The figures presented in the tables in the appendix are a snapshot of the data at the time of current publication.
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