Detailed charts
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European sector accounts show detailed economic developments by institutional sector. The accounts are only calculated at current prices, meaning in nominal terms. They do not permit an analysis of volume changes, such as economic growth or price developments. Moreover, the growth rates of the EU aggregates may be affected by movements in exchange rates and should be used with caution.
However, significant ratios such as the household saving rate can be derived as the influence of price developments on the numerator and denominator is cancel out. The same applies for EU ratios for which there is hardly any impact due to fluctuations of the exchange rate.
The charts available above present an overview of the euro area/EU economy as a whole, as well as specific features of sectors. Because of exchange rate movements, only ratio series are displayed for the European Union.
Most of the charts analyse the contributions of components to the annual nominal growth rate of an aggregate. Such annual growth rates are calculated as the percentage change of the item concerned between the reference quarter and the same quarter of the previous year, so that seasonal effects are eliminated. As a consequence, the growth rates for a given quarter in fact refer to the average change over the four previous quarters.
Unadjusted quarterly data generally show large fluctuations that can be split into a regular quarterly pattern and an irregular component.
To smooth fluctuating series without using seasonal adjustment methods the charts available in this section typically show a moving sum, adding the value of the three preceding quarters to that of the quarter concerned. Of course, this method then presents the developments over the past year and not just those of the most recent quarter; on the other hand this smoothing effect makes the analysis also easier.
For non-financial items (except for net lending/borrowing, which is linked to the financial accounts), the annual growth rate is calculated as the percentage change between the value of the transaction for a given quarter and that recorded four quarters earlier. Let nt be the level of a non-financial transaction; then its annual percentage change g(nt) is calculated as:
The annual growth rate used to analyse developments in the financial accounts refers to the total level of transactions over the year in relation to the outstanding stock a year before. Thus it measures changes in the levels of stocks and is not directly comparable to the growth rates computed for the non-financial accounts. When ft represents the level of a transaction in a particular financial instrument, and Ft represents the level of the corresponding stock outstanding at time t, then the annual growth rate g(ft) is calculated as the sum of the transactions during the year divided by the outstanding stock of the previous year.
Since these growth rates are calculated on the basis of financial transactions, they exclude reclassifications, revaluations and other changes that do not arise from transactions.
Chart S1-1 shows the structural shares of each institutional sector in several key economic indicators for the euro area. A chart for the European Union would be similar.
The biggest share of GDP (or gross value added) originates in non-financial corporations (around 60%), while slightly less than one-quarter is generated by household production activities, mainly the imputed value of the services from owner-occupied dwellings, and small businesses. The government accounts for around 15% and financial corporations for a small fraction of GDP.
Most value added created in the corporate and government sectors is passed on to households in the form of salaries and total (employers' and employees') social contributions. The dominant share of national income thus accrues to the household sector.
Subsequently, this share is somewhat reduced by taxes, net social insurance payments and other transfers, which are largely paid to the government. This results in the disposable income, which is available for consumption or saving.
Both households and government spend a large proportion of their disposable income on consumption. As a result, the share of households and government in saving is smaller and the share of financial and non-financial corporations is larger than their shares in disposable income.
For non-financial corporations, disposable income broadly equals their gross saving, which is broadly equivalent to retained earnings plus depreciation in business accounting. Households and non-financial corporations undertake most investment (gross fixed capital formation at around 30% and 50% respectively).
The net indicators (net disposable income, net saving etc.) are computed by deducting consumption of fixed capital from the gross indicators. The consumption of fixed capital represents the amount of fixed assets (buildings, machinery etc.) used up during the period under consideration as a result of normal wear and tear and foreseeable obsolescence. In other words, net income represents the amounts available for consumption and saving after making provisions for the future replacement costs of used or obsolete fixed assets.
Chart S1-2 shows the contribution of each sector to the annual nominal growth rate of euro area gross value added (GVA) at basic prices (which is equal to GDP at market prices minus taxes plus subsidies on products). The gross value added of non-financial corporations delivers not only the largest contribution to GDP growth, but is also quite volatile. The contribution of value added generated in the household sector fluctuates less, partly because of the stabilising influence of the imputed rent on owner-occupied dwellings. The contributions of the financial corporations and government sectors are rather small.
Chart S1-3 shows the contributions of sectors to the growth of nominal net disposable income. Households and government are the main contributors due to their shares in total income (see chart S1-1) In the case of government, the contribution is generally lower when GDP grows more slowly, reflecting lower tax receipts and higher net social security payments (especially unemployment benefits).
Chart S1-4 shows the contributions of the individual sectors' total final expenditures (consumption and capital formation) to the growth rate of euro area GDP. Households are the main contributor, mostly through their final consumption. Corporations contribute through capital formation (investments in fixed assets and changes in inventories).
Contributions of sectors to the nominal growth rate of euro area capital formation are plotted on Chart S1-5. Gross capital formation includes mainly investments made in fixed assets (buildings, machinery) but also changes in inventories. The overall growth of gross capital formation is mainly driven by developments in the non-financial corporation sector and, to a lesser extent, by households (dwellings).
Chart S1-6 (euro area) and Chart S1-7 (EU) show the contributions of the various sectors to the net lending (if positive) or net borrowing (if negative) of he euro area and EU economy.
Chart S1M-1 shows the growth rate of euro area households' disposable income (in current prices). The main contribution to households' income growth is provided by compensation of employees (that is, wages and salaries plus total social contributions). The contribution from gross operating surplus and mixed income (which accrues to self-employed households and home owners) comes next. Net property income (interest received minus interest paid, dividends, etc) and net social benefits are the most volatile components with the latter affected by the position in the business cycle.
Chart S1M-2 shows the net lending/borrowing of households and its components, namely gross saving, gross fixed capital formation and net capital transfers plus other capital transactions, as a share of household gross disposable income.
Chart S11-1 shows the development of the ‘net income ratio’ of non-financial corporations which is calculated, in percentage, as net entrepreneurial income divided by net value added. This other profitability indicator is derived from net entrepreneurial income which approximates the concept of pre-tax corporate profits in business accounting. The net income ratio is provided for both the euro area and the EU.
Chart S11-2 shows the growth of net entrepreneurial income of non-financial corporations in the euro area. Net entrepreneurial income equals net value added plus subsidies on production and property income receivable from financial assets owned by non-financial corporations (including profits of foreign subsidiaries), minus compensation of employees, taxes on production, interest and (land) rents payable.
Chart S11-3 compares the growth of gross value added with that of investment in fixed assets (gross fixed capital formation) of the euro area non-financial corporations. This information can also be summarised in the gross investment rate defined as gross fixed capital formation divided by the value added of non-financial corporations. The investment rate, which is one of the key indicators for this sector, is provided for the euro area and EU.
Profits, measured as net entrepreneurial income, are mainly used to pay taxes and remunerate capital in the form of interest and dividends paid to shareholders. The remainder, after withdrawing net capital transfers, net fixed capital formation, changes in inventories and net acquisitions of valuables, forms the net lending/borrowing of non-financial corporations.
Chart S12-1 shows the growth of the net entrepreneurial income of financial corporations in the euro area. Net entrepreneurial income broadly equals net value added plus net interest plus dividends / profits of foreign subsidiaries (reinvested earnings) received and net (land) rents minus compensation of employees paid. Income created by financial intermediation between borrowers and lenders (FISIM) is recorded in value added and not as net interest.