Government finance statistics: net financial worth – Products Eurostat News

by dimsam Finance

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 -€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 €282 billion. Compared with the end of the third quarter of 2021, the EU net financial worth improved by €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.

Bar and line graph: EU net financial worth, Q1 2008 - Q3 2022 as a % of GDP and in € billion

Source dataset: gov_10q_ggfa

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 consisting of 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 increase in net financial worth in recent quarters. At the same time, the EU general government deficit continued (measured as transactions in financial assets minus transactions in liabilities) contributed negatively to the net financial worth.