- Euro area net saving decreased to €534 billion in four quarters to third quarter of 2020, from €618 billion one quarter earlier
- Household debt-to-income ratio at 95.7% in third quarter of 2020, up from 93.5% one year earlier
- Non-financial corporations’ debt-to-GDP ratio (consolidated measure) at 83.8% in third quarter of 2020, up from 79.3% one year earlier
Total euro area economy
Euro area net saving decreased to €534 billion (5.9% of euro area net disposable income) in the four quarters to the third quarter of 2020 compared with €618 billion in the four quarters to the previous quarter. This reflected larger negative saving by government and decreased net saving by non-financial corporations (NFCs), which were only partly offset by increased saving by households. Net non-financial investment decreased to €323 billion (3.5% of net disposable income), from €389 billion previously, mainly due to decreased investment by NFCs.
Net lending to the rest of the world decreased to €221 billion in the four quarters to the third quarter of 2020 (from €236 billion in the four quarters to the previous quarter), reflecting the decreased net saving that was only partially compensated by the decreased net non-financial investment. Net lending by NFCs increased to €59 billion (0.7% of net disposable income) from €25 billion, while for financial corporations it was broadly unchanged at €74 billion (0.8% of net disposable income). Net lending by households rose to €661 billion (7.3% of net disposable income) from €571 billion. The increase in net lending by the total private sector was more than offset by higher net borrowing by the government sector (-6.3% of net disposable income, compared with -4.7% previously).
Households
The annual growth rate of household financial investment increased to 3.5% in the third quarter of 2020, from 3.3% in the previous quarter. Increased investment in currency and deposits, as well as in shares and other equity, were the main contributors to this strengthening of growth, together with lower net sales of debt securities.
Households were overall net buyers of listed shares. By issuing sector, they were net buyers of listed shares of NFCs, other financial institutions, insurance corporations and the rest of the world (i.e. shares issued by non-residents). Households continued to reduce holdings of debt securities issued by MFIs and, to a lesser extent, by government, NFCs and the rest of the world, while marginally increasing holdings of debt securities issued by other sectors (see Table 1 below and Table 2.2 in the Annex).
The household debt-to-income ratio[1] increased to 95.7% in the third quarter of 2020, from 93.5% in the third quarter of 2019, as the outstanding amount of loans to households grew faster than disposable income. The household debt-to-GDP ratio also increased, to 61.6% in the third quarter of 2020, from 57.7% in the third quarter of 2019 (see Chart 2), as debt increased and GDP declined.
Non-financial corporations
In the third quarter of 2020, the annual growth of financing of NFCs increased to 2.1%, from 1.9% in the previous quarter. This resulted from a moderate acceleration in financing through equity and loans (notably those from other NFCs), as well as from a slowdown in the decline of trade credits. Financing through debt securities decelerated (see Table 2 below and Table 3.2 in the Annex).
NFCs’ debt-to-GDP ratio (consolidated measure) increased to 83.8% in the third quarter of 2020, from 79.3% in the third quarter of 2019; the non-consolidated (wider) debt measure increased to 146.2% from 139.3% (see Chart 2). The increases in these ratios were due to an increase in the debt of NFCs and a decline in GDP over this period.
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