January 23, 2023
The general government financial accounts cover transactions in financial assets and liabilities as well as the stock of financial assets and liabilities. The difference between the stock of financial assets and the stock of liabilities is called net financial worth.
At the end of the third quarter of 2022, the EU net financial worth stood at -EUR 7 684 billion or -49.6% of gross domestic product (GDP). Compared with the end of the second quarter of 2022, the EU net financial worth improved by EUR 282 billion. Compared with the end of the third quarter of 2021, the EU net financial worth improved by EUR 1 318 billion.
This information comes from data on quarterly government finance published by Eurostat today. This article presents a handful of findings from the more detailed Statistics Explained article.
The net financial worth can change either due to transactions or due to other economic flows (mainly price changes, also known as holding gains or losses). The main financial instrument liabilities on the general government’s balance sheet are debt securities. As these are traded on the financial markets, the value of these instruments changes over time and can be volatile.
In recent quarters, the existing stock of debt securities has decreased in market value at the EU level, notably due to increases in interest rates. A major part of financial assets on the balance sheet of EU governments are equity and investment fund shares or units, mainly comprising shares held in public corporations. These include the shares held in the National Central Bank, the value of which is influenced by the revaluation of the monetary reserves. At EU level, the increase in the value of equity and investment fund shares or units and the decreased value of debt securities contributed to an improvement in net financial worth in recent quarters. At the same time, the continued EU general government deficit (measured as transactions in financial assets minus the transactions in liabilities) contributed negatively to the net financial worth.
For more information:
- Statistics Explained article on quarterly government finance statistics
- Thematic section on government finance statistics
- Database on quarterly government finance statistics
- Database on government finance statistics
- In the European System of Accounts (ESA 2010), most assets and liabilities are valued at market value. This means that the stock of financial assets and liabilities fluctuates due to transactions, but also due to “other flows”, notably revaluations (nominal holdings gains and losses).
- The stock of assets and liabilities and net financial worth as a percentage of GDP are calculated for each quarter using the sum of quarterly GDP for the four last quarters.