Euro area economic and financial developments by institutional sector: third quarter of 2023 (2024)

  • STATISTICAL RELEASE

26 January 2024

  • Euro area net saving increased to €734 billion in four quarters to third quarter of 2023, compared with €685 billion one quarter earlier
  • Household debt-to-income ratio decreased to 88.1% in third quarter of 2023 from 94.3% one year earlier
  • Non-financial corporations' debt-to-GDP ratio (consolidated measure) decreased to 68.1% in third quarter of 2023 from 73.7% one year earlier

Total euro area economy

Euro area net saving increased to €734 billion (6.5% of euro area net disposable income) in the four quarters to the third quarter of 2023, as compared with €685 billion in the four-quarter period ending in the second quarter. Euro area net non-financial investment decreased to €564 billion (5.0% of net disposable income), mainly due to decreased investment by non-financial corporations (see Chart 1 and Table 1 in the Annex).

Euro area net lending to the rest of the world grew to €216 billion (from €87 billion in the previous quarter), reflecting increased net saving and decreased non-financial investment. Net lending of non-financial corporations grew to €213 billion (1.9% of net disposable income) from €161 billion, and that of financial corporations increased to €102 billion (0.9% of net disposable income) from €92 billion. Net lending by households increased to €390 billion (3.5% of net disposable income) from €361 billion. Net borrowing by general government decreased, contributing thus less negatively (-€489 billion or ‑4.4% of net disposable income, after -€528 billion) to euro area net lending.

Chart 1

Euro area saving, investment and net lending to the rest of the world

(EUR billions, four-quarter sums)

Euro area economic and financial developments by institutional sector: third quarter of 2023 (1)

Data for euro area saving, investment and net lending to the rest of the world (Chart 1)

Households

Household financial investment increased at an annual rate of 1.8% in the third quarter of 2023, down from 2.0% in the previous quarter. This deceleration was mainly due to lower growth rates of currency and deposits as well as life insurance, while net purchases of debt securities further strongly accelerated.

Households increased investment in debt securities was again driven by net purchases of debt securities issued by general government and MFIs. Households were overall net buyers of listed shares, purchasing listed shares of non-financial-corporations, other financial institutions, and the rest of the world (i.e. shares issued by non-euro area residents), while selling shares issued by MFIs and insurance corporations (see Table 1 below and Table 2.2. in the Annex).

The household debt-to-income ratio[1] decreased to 88.1% in the third quarter of 2023 from 94.3% in the third quarter of 2022. The household debt-to-GDP ratio also decreased, to 54.4% in the third quarter of 2023 from 57.6% in the third quarter of 2022 (see Chart 2).

Table 1

Financial investment and financing of households, main items

(annual growth rates)

Financial transactions

2022 Q3

2022 Q4

2023 Q1

2023 Q2

2023 Q3

Financial investment*

2.6

2.5

2.3

2.0

1.8

Currency and deposits

4.0

3.8

2.3

1.6

0.5

Debt securities

8.8

16.3

39.6

50.3

60.1

Shares and other equity

1.8

1.0

1.2

0.9

0.9

Life insurance

1.0

0.8

0.8

0.6

0.0

Pension schemes

2.4

2.4

2.3

2.3

2.5

Financing**

5.1

4.7

4.1

2.2

1.4

Loans

4.3

3.7

2.9

1.8

1.0

Data for financial investment and financing of households (Table 1)

Chart 2

Debt ratios of households and non-financial corporations

(percentages of GDP)

Euro area economic and financial developments by institutional sector: third quarter of 2023 (2)

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

Non-financial corporations

Financing of non-financial corporations increased at an annual rate of 0.6% in the third quarter, after 0.8% in the previous quarter. This slower growth resulted mainly from a deceleration in financing by loans, in particular from MFIs, government and the rest of the world, while loans from other financial institutions increased. The net issuance of debt securities accelerated, although from a low level. Financing via trade credits and advances became negative, while financing by shares and other equity turned positive. The positive development for shares and other equity was driven by unlisted shares and other equity, partly offset by higher net redemptions of listed shares (see Table 2 below and Table 3.2 in the Annex).

Non-financial corporations' debt-to-GDP ratio (consolidated measure) decreased to 68.1% in the third quarter of 2023, from 73.7% in the third quarter of 2022; the non-consolidated, wider debt measure declined to 126.9% from 136.3% (see Chart 2).

Table 2

Financing and financial investment of non-financial corporations, main items

(annual growth rates)

Financial transactions

2022 Q3

2022 Q4

2023 Q1

2023 Q2

2023 Q3

Financing*

2.8

1.9

1.3

0.8

0.6

Debt securities

3.1

1.0

0.0

0.7

1.8

Loans

5.9

4.5

3.4

2.6

0.9

Shares and other equity

0.7

0.5

0.3

-0.2

0.2

Trade credits and advances

9.4

4.2

2.5

0.9

-0.7

Financial investment**

4.1

3.0

2.5

1.7

1.5

Currency and deposits

7.1

5.1

0.7

-1.8

-2.3

Debt securities

10.9

14.5

23.8

22.6

26.0

Loans

5.5

4.3

3.6

2.8

2.1

Shares and other equity

2.1

1.5

1.1

0.7

1.2

Data for financing and financial investment of non-financial corporations (Table 2)

For queries, please use the Statistical information request form.

Notes

  • These data come from a second release of 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 completed data for all sectors compared with the first quarterly release on "Euro area households and non-financial corporations" of 11 January 2024.
  • The euro area and national financial accounts data of non-financial corporations and households are available in an interactive dashboard.
  • The debt-to-GDP (or debt-to-income) ratios are calculated as the outstanding amount of debt in the reference quarter divided by the sum of GDP (or income) in the four quarters to the reference quarter. The ratio of non-financial transactions (e.g. savings) as a percentage of income or GDP is calculated as sum of the four quarters to the reference quarter for both numerator and denominator.
  • The annual growth rate of non-financial transactions and of outstanding assets and liabilities (stocks) is calculated as the percentage change between the value for a given quarter and that value recorded four quarters earlier. The annual growth rates used for financial transactions refer to the total value of transactions during the year in relation to the outstanding stock a year before.
  • Hyperlinks in the main body of the statistical release lead to data that may change with subsequent releases as a result of revisions. Figures shown in annex tables are a snapshot of the data as at the time of the current release.
  • The ECB published on 8 January 2024 the first experimental Distributional Wealth Accounts (DWA) for the household sector. The release of results for 2023Q3 is planned for end-February 2024.
  1. Calculated as loans divided by gross disposable income adjusted for the change in pension entitlements.

Annexes

26 January 2024

Tables

ENGLISH

26 January 2024

Charts

ENGLISH

As an expert in economic and financial analysis, I bring a wealth of knowledge and experience to interpret the statistical release dated January 26, 2024, regarding the Euro area's financial trends. My extensive background in macroeconomic indicators and financial market dynamics equips me to dissect the key concepts and offer insights into the implications of the data.

The statistical release highlights several critical indicators that shed light on the economic health of the Euro area. Let's break down the key concepts discussed in the release:

  1. Euro Area Net Saving:

    • Increased to €734 billion (6.5% of euro area net disposable income) in the four quarters to the third quarter of 2023, compared to €685 billion in the previous four-quarter period.
    • Net non-financial investment decreased to €564 billion (5.0% of net disposable income), primarily due to reduced investment by non-financial corporations.
  2. Net Lending to the Rest of the World:

    • Grew to €216 billion, reflecting increased net saving and decreased non-financial investment.
    • Net lending by non-financial corporations, financial corporations, and households all experienced growth.
  3. Household Debt-to-Income Ratio:

    • Decreased to 88.1% in the third quarter of 2023 from 94.3% one year earlier.
    • Household debt-to-GDP ratio also decreased, reaching 54.4% in the third quarter of 2023 from 57.6% in the third quarter of 2022.
  4. Financial Investment and Financing of Households:

    • Household financial investment increased at an annual rate of 1.8% in the third quarter of 2023, with notable changes in currency and deposits, debt securities, and life insurance.
    • The household debt-to-GDP ratio decreased, reflecting a healthier financial position for households.
  5. Non-Financial Corporations:

    • Financing of non-financial corporations increased at an annual rate of 0.6% in the third quarter of 2023.
    • The debt-to-GDP ratio (consolidated measure) for non-financial corporations decreased to 68.1% in the third quarter of 2023 from 73.7% one year earlier.
  6. Financing and Financial Investment of Non-Financial Corporations:

    • Financing via loans decelerated, while net issuance of debt securities accelerated.
    • Debt securities, loans, and shares and other equity are major components of non-financial corporations' financial activities.

In conclusion, the Euro area is experiencing positive trends in net saving, decreased household debt ratios, and improved financial positions for both households and non-financial corporations. These indicators collectively suggest a strengthening economic landscape. However, the specific nuances of financing and investment patterns provide a nuanced understanding of the dynamics at play.

Euro area economic and financial developments by institutional sector: third quarter of 2023 (2024)
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