Data extracted in April 2019.
Planned article update: May 2020.
In 2017, the household saving rate in the EU ranged from 22.0 % in Luxembourg to -3.1 % in Cyprus.
In 2017, the household gross-debt-to-income ratio in the EU ranged from 239 % in Denmark to 33 % in Hungary.
In 2017, the investment rate for non-financial corporations in the EU ranged from 28.1 % in Czechia to 16.9 % in Greece.
Gross saving rate for households, 2017
Economic developments in production, income generation and (re)distribution, consumption and investment may be better understood when analysed by institutional sector. In particular, the European Union’s (EU’s) sector accounts provide several key indicators for households and non-financial corporations, like the household saving rate or the business profit share.
The analysis in this article focuses on a selection of indicators from the wealth of sector accounts data that are collected by Eurostat. Households’ behaviour is described through indicators covering gross saving and investment rates, as well as gross debt-to-income and net financial wealth-to-income ratios. The analysis of non-financial corporations is based on the gross business investment rate and their gross profit share.
Households (including non-profit institutions serving households)
Table 1 shows that the household saving rate in 2017 was 2.2 percentage points higher in the euro area (EA-19) at 11.8 % than it was for the whole of the EU-28 (9.6 %). This gap is, at least in part, explained by the relatively high saving rates in two of the largest euro area members, Germany (17.3 %) and France (13.9 %).
Among the EU Member States within the euro area (no data available for Greece and Malta), nine had household saving rates in 2017 that were higher than the EU-28 average (Luxembourg, Germany, the Netherlands, Slovenia, France, Austria, Estonia, Belgium and Ireland). In Italy, the saving rate was the same as in the EU-28 (9.6 %) while in the remaining seven members of the euro area the saving rate was below the EU-28 average; among these, the household saving rate was negative in Lithuania (-1.5 %) and Cyprus (-3.1 %).
The highest household saving rate among the EU Member States not in the euro area (no data available for Croatia or Romania) was recorded in Sweden (17.6 %) which was the second highest saving rate among all EU Member States (see Figure 1) behind Luxembourg; note that an even higher rate was recorded in Switzerland (22.9 %; 2016 data). By contrast, the lowest household saving rates among the Member States not in the euro area were recorded in the United Kingdom (4.5 %) and Poland (4.4 %; 2016 data).
Between 2016 and 2017, the savings rate in both the EU-28 and the euro area fell, by 1.0 percentage points in the former and 0.3 points in the latter. The largest falls between 2016 and 2017 (among the EU Member States for which data are available) were observed in Spain, the United Kingdom (both -2.3 points), Czechia (-2.1 points), Latvia (-1.9 points) and Lithuania (-1.6 points), while the largest increases were recorded in Luxembourg (rising 2.5 percentage points) and Ireland (2.7 points).
Household investment rate
In 2017, the gross household investment rate was 8.2 % in the EU-28 (see Figure 2), while the corresponding figure for the euro area was 0.6 percentage points higher at 8.8 %. The household investment rate ranged (among the 24 EU Member States for which data are available) from 11.3 % in Finland and rates of at least 10.0 % in the Netherlands, Cyprus, Belgium and Luxembourg, down to 4.8 % in Latvia. Norway (12.9 %) reported a gross household investment rate that was higher than in any of the Member States.
Between 2016 and 2017, the household investment rate rose by 0.4 percentage points in the EU-28 and by 0.3 points in the euro area. Among the EU Member States, the changes in this rate were relatively small: aside from a marked increase in the rate for Cyprus (up by 1.7 points) changes in the household investment rate ranged from an increase of 0.8 points in Spain and Hungary down to a decrease of 0.7 points in Luxembourg.
Household debt-to-income ratio
In 2017, the household debt-to-income ratio in the euro area was 94.0 % (no data available for the EU-28). This ratio varied considerably between the 24 EU Member States for which data were available at the time of writing. While it was below 50 % in Bulgaria (2016 data), Hungary, Latvia, Lithuania and Slovenia, it exceeded 200 % in the Netherlands and Denmark; a rate of 200 % indicates that it would take two years of disposable income for households to repay their debts. It should be borne in mind that high household debt may to some extent mirror high levels of financial assets, as shown in the analysis of the household net financial wealth-to-income ratio. It may also mirror the ownership of non-financial assets, such as dwellings, or be impacted by national provisions that foster borrowing (for example, the deduction of interest payments from taxable income).
In 2017, the household debt-to-income ratio in the euro area decreased by 0.3 percentage points (when compared with 2016). By far the largest falls for this ratio were observed in Cyprus (down 15.9 points) and in Ireland (down 10.5 points), while the next largest reductions were 5.4 points in Denmark and 3.7 points in Portugal. By contrast, among the EU Member States for which data are available, the largest increases for this ratio were recorded in Sweden (up 5.9 points) and Slovakia (4.4 points), while increases within the range of 2.0 to 3.0 points were recorded in the United Kingdom, France and Finland.
Household net financial wealth-to-income ratio
In 2015, net financial wealth was equivalent to 250.1 % of household income in the EU-28, while in the euro area the ratio was somewhat lower at 239.0 % in 2017 (see Figure 3). Like the debt-to-income ratio, the household net financial wealth-to-income ratio differed considerably between EU Member States. The highest ratios in 2017 were recorded in the Netherlands and Belgium (both over 400 %), followed by Sweden, the United Kingdom and Denmark (where ratios were above 300 %), while relatively high values were also observed in Italy, France, Luxembourg, Austria, Ireland and Germany (all within the range of 200 % to 300 %); two of the non-EU countries shown in Figure 3 — Iceland (2014 data) and Switzerland (2016 data) — also reported relatively high net financial wealth-to-income ratios. Slovakia was the only EU Member State (for which data are available) to record a net financial wealth-to-income ratio that was below 100 %, while this situation was also observed in Norway and Turkey (2015 data).
In 2017, the household net financial wealth-to-income ratio for the euro area increased by 3.0 percentage points (when compared with 2016). The ratio of household net financial wealth-to-income rose relatively rapidly in 2017 in Denmark (up 11.8 points) and Lithuania (11.7 points). Among the 22 EU Member States for which data are available for a comparison between 2016 and 2017, this ratio decreased in four: the change was relatively small (down 2.3 points) in Slovakia, while the decrease exceeded 10.0 points in the three Benelux countries.
Business investment rate
Table 2 shows that the business investment rate for non-financial corporations in 2017 was 22.9 % in the EU-28; this was marginally higher than in the euro area (22.8 %).
The highest business investment rate among the 26 EU Member States (for which data are available) was recorded in Czechia (28.1 % in 2017), while rates were within the range of 25.0 % to 28.0 % in Slovakia, Sweden, Spain, Cyprus, Ireland, Austria, Belgium, Hungary and Romania. Among the non-EU countries shown in Figure 4, a relatively high business investment rate was also recorded in Switzerland (25.8 %; 2016 data) and most notably in Turkey (34.6 %; 2015 data).
The lowest business investment rate for non-financial corporations among the EU Member States was recorded in Greece (16.9 %), while the United Kingdom, Lithuania, the Netherlands and Germany were the only other Member States to record rates below 20.0 %. The business investment rates of the five largest EU-28 economies varied quite considerably: in Spain (27.5 %) the rate for 2017 was above the EU-28 average; in France (23.5 %) it was in line with the EU-28 average; in Italy (21.3 %), Germany (19.9 %) and the United Kingdom (17.9 %) the business investment rates were clearly below the EU-28 average (see Figure 4).
Between 2016 and 2017, the business investment rate decreased in both the EU-28 and the euro area by a small margin, falling by 0.2 percentage points in the former and by 0.4 points in the latter. Among the 24 EU Member States (for which data are available), this rate rose between 2016 and 2017 in a majority (18) of cases, most notably in Cyprus (4.5 points). The largest decrease in the business investment rate in 2017 (compared with 2016) was recorded in Ireland (down 18.8 points).
Profit share of non-financial corporations
The profit share of non-financial corporations was 40.1 % in the EU-28 in 2017 and 0.8 percentage points (calculated from data before rounding) higher in the euro area (40.8 %). The lowest profit shares among the EU Member States were recorded in Luxembourg (31.0 %) and France (31.9 %). By contrast, profit shares within the range of 50.4-54.4 % were posted in Lithuania, Greece and Romania, with the shares in Malta (61.2 %) and Ireland (72.6 %) above this range.
The profit share of non-financial corporations was almost unchanged between 2016 and 2017 in the EU-28 and the euro area (both down 0.1 percentage points). Among the 25 EU Member States for which data are available, Finland recorded the highest percentage point increase in its profit share between 2016 and 2017, rising 1.9 percentage points. By contrast, there were nine Member States which recorded a reduction in their profit shares between 2016 and 2017, most notably Luxembourg (down 3.8 points) and Slovakia (down 1.7 points).
Source data for tables and graphs
Following international agreement on an updated version of the worldwide guidelines for national accounts (SNA) in 2008, an update of the European system of national and regional accounts (ESA 2010) was adopted in May 2013 and implemented from September 2014.
ESA 2010 replaced ESA 95 and provides a new and internationally compatible accounting framework for a systematic and detailed description of economic activity in the EU Member States and their regions. For more information on the transition to ESA 2010 please refer to a background article on this subject. For a detailed description on the effects of the implementation of ESA 2010 on European sector accounts please refer to an article on this subject, see pages 20-24 in EURONA (2/2014).
Sector accounts group together economic subjects with similar behaviour into institutional sectors, such as: households, non-financial corporations, financial corporations and government. Grouping economic subjects in this way can help to understand the functioning of the economy; the behaviour of households and non-financial corporations is particularly relevant in this respect.
The household sector covers individuals or groups of individuals acting as consumers and entrepreneurs provided, in the latter case, that their activities as market producers are not carried out by separate entities. For the purpose of the analysis within this article, this sector has been merged with the relatively small sector of non-profit institutions serving households (NPISH) —examples include charities, relief and aid organisations, religious groups, consumer associations, sports and recreational clubs, professional societies, trade unions and political parties. It should be noted that the NPISH sector in the EU-28 accounts for around 2 % of the combined total financial assets and liabilities of households and NPISH.
Non-financial corporations cover enterprises whose principal activity is the production of goods and non-financial services to be sold on the market. It includes incorporated enterprises, but also unincorporated enterprises as long as they keep a complete set of accounts and have an economic and financial behaviour which is similar to that of corporations. Small businesses (such as sole traders and entrepreneurs operating on their own) are recorded under the household sector.
Sector accounts record, in principle, every transaction between economic subjects during a certain period and can also be used to show the opening and closing stocks of financial assets and liabilities in financial balance sheets. These transactions are grouped into various categories that have a distinct economic meaning, such as the compensation of employees (comprising wages and salaries, before taxes and social contributions are deducted, and social contributions paid by employers). In turn, these categories of transactions are shown in a sequence of accounts, each of which covers a specific economic process. This ranges from production, income generation and income (re)distribution, through the use of income, for consumption and saving, and investment, as shown in the capital account, to financial transactions such as borrowing and lending. Each non-financial transaction is recorded as an increase in the resources of a specific institutional sector and an increase in the uses of another institutional sector. For instance, the resources side of the interest transaction category records the amounts of interest receivable by different sectors of the economy, whereas the uses side shows interest payable. For each type of transaction, total resources of all sectors and the rest of the world equal total uses. Each account leads to a meaningful balancing item, the value of which equals total resources minus total uses. Typically, such balancing items, such as GDP or net saving, are important economic indicators; they are carried over to the next account.
Since the beginning of the economic and monetary union (EMU) in 1999, the European Central Bank (ECB) has been one of the main users of national accounts. A large number of monetary and financial indicators are evaluated in relation to other relevant data that allow the combination of monetary, financial and economic analysis, for example, key national accounts aggregates and sector accounts. In this way monetary and financial indicators can be analysed within the context of the rest of the economy.
Financial institutions’ interest in national accounts may range from a broad analysis of the economy to specific information concerning savings, investment or debt among households, non-financial corporations or other institutional sectors.
- European sector accounts - background (background article)
- European system of national and regional accounts - ESA 2010
- Main users of national accounts (background article)
- National accounts and GDP
- Household saving rate (tec00131)
- Household investment rate (tec00098)
- Gross debt-to-income ratio of households (tec00104)
- Investment rate of non-financial corporations (tec00099)
- Profit share of non-financial corporations (tec00100)
- Key indicators (nasa_10_ki)
- European system of accounts — ESA 2010
- Non-financial transactions (ESMS metadata file — nasa_10_nf_tr_esms)
- Presentation of ESA 2010 based sector accounts data in Eurobase
- European sector accounts — concepts