Euro area economic and financial developments by institutional sector: first quarter of 2021

28 July 2021

• Euro area net saving decreased to €517 billion in four quarters to first quarter of 2021, compared with €528 billion one quarter earlier
• Household debt-to-income ratio increased to 96.4% in first quarter of 2021 from 93.6% one year earlier
• Non-financial corporations' debt-to-GDP ratio (consolidated measure) rose to 84.7% in first quarter of 2021 from 77.2% one year earlier

Total euro area economy

Euro area net saving decreased to €517 billion (5.8% of euro area net disposable income) in the four quarters to the first quarter of 2021 compared with €528 billion in the four quarters to the previous quarter. Euro area net non-financial investment declined to €244 billion (2.7% of net disposable income), mainly due to decreased investment by non-financial corporations (see Chart 1).

Euro area net lending to the rest of the world increased to €282 billion (from €242 billion in the previous quarter) reflecting non-financial investment decreasing more than net saving. Net lending of non-financial corporations increased to €234 billion (2.6% of net disposable income) from €134 billion, while that of financial corporations rose slightly to €105 billion (1.2% of net disposable income) from €102 billion. Net lending by households increased to €901 billion (10.0% of net disposable income) from €836 billion. The higher net lending by the total private sector was partly offset by an increase in net borrowing by the government sector (-10.7% of net disposable income, after -9.2% previously).

Households

The annual growth rate of household financial investment increased to 4.9% in the first quarter of 2021, from 4.2% in the previous quarter. Investment in currency and deposits, unlisted shares and other equity, investment fund shares as well as life insurance and pension schemes were main contributors to this acceleration. Investment in listed shares grew at a lower rate, and net disinvestment from debt securities continued at a slightly lower rate.

Households were net buyers of listed shares. By issuing sector, they were net buyers of listed shares of the rest of the world (i.e. shares issued by non-euro area residents), non-financial corporations, other financial institutions as well as insurance corporations and pension funds, and net sellers of listed shares of MFIs. Households continued selling (in net terms) debt securities issued by all resident sectors and the rest of the world (see Table 1 below and Table 2.2. in the Annex).

The household debt-to-income ratio^[1] increased to 96.4% in the first quarter of 2021 from 93.6% in the first quarter of 2020, as the outstanding amount of loans to households grew faster than disposable income. The household debt-to-GDP ratio increased, to 62.8% in the first quarter of 2021 from 58.1% in the first quarter of 2020 (see Chart 2), as debt increased and GDP declined.

Non-financial corporations

In the first quarter of 2021, the annual growth of financing of non-financial corporations increased to 2.2%, after 2.0% in the previous quarter. An increase in financing by trade credits, after a decline in the previous quarter, was the main contributor to this development. Financing by equity accelerated, while debt securities financing grew at a lower – albeit still high – rate. Loan financing decelerated as a result of a deceleration in loans from MFIs and a decline in loans from the rest of the world, while intercompany loans and loans from general government and non-MFI financial corporations grew at higher rates (see Table 2 below and Table 3.2 in the Annex).

Non-financial corporations' debt-to-GDP ratio (consolidated measure) increased to 84.7% in the first quarter of 2021, from 77.2% in the first quarter of 2020; the non-consolidated, wider debt measure rose to 148.7% from 136.8% (see Chart 2). The increases in these ratios were due to a rise in the debt of NFCs and a decline in GDP over this period.

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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 5 July 2021.
• 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.
• The next release of the Household Sector Report containing results for the euro area and all EU countries is scheduled for 9 August 2021.
• 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 production of quarterly financial accounts (QFA) may have been affected by the COVID-19 crisis. More information on the potential impact on QFA can be found here.