Observed differences for net lending / net borrowing between annual non-financial and financial accounts (ESA tables 6 and 8 compared) Item 7 Eurostat Task Force on Annual Financial Accounts Frankfurt, 4 March 2016

Background Net lending or borrowing is conceptually the same as in the non-financial accounts (capital account (B.9)) as in the financial account (B.9F) In practice, if the measure is derived independently, it could differ significantly for the various institutional sectors, including the rest of the world. Affect the interpretation of the institutional sector accounts. TF AFA

Comparison Differences in net lending/net borrowing between ESA 2010 annual non-financial accounts and financial accounts by institutional sector and by EU Member States. Years 2012-2014 TF AFA

differences between net lending/net borrowing of non-financial and financial accounts by institutional sectors (2012, 2013, 2014, % of GDP) S1 S11 S12 S13 S14_15 S2 2012 2013 2014 EU 28 0,65% 1,13% -0,42% -0,32% -0,05% -1,54% -0,38% 0,15% -0,06% 0,06% 0,05% 0,03% 1,29% 0,98% 1,15% -0,65% -1,13% 0,42% Belgium 0,00% 3,05% -1,99% 1,25% -5,47% 0,78% -2,80% -0,07% -0,16% -0,28% 2,49% 1,37% 1,84% Bulgaria -0,09% 8,30% : -9,03% -10,09% -9,46% 5,16% 0,17% 0,68% 18,23% 12,55% 0,09% -8,29% Czech Republic Denmark Germany 1,33% 2,48% -6,39% 0,59% 1,67% -7,19% 0,54% 0,40% 0,37% 0,18% 0,26% 0,33% 0,16% 0,10% -1,33% -2,48% 6,39% Estonia 1,58% 0,08% -0,26% -3,62% -1,50% -0,35% -0,54% 0,20% 0,11% 0,30% 3,42% 0,55% 2,22% -1,58% -0,08% Ireland -0,13% 1,09% -1,85% -1,80% -0,24% -1,47% 0,07% 2,03% 2,58% 3,45% 0,13% -1,09% Greece -9,65% -4,30% -7,40% -9,47% -12,02% -8,45% -3,38% -0,15% -4,14% -0,04% 0,62% 3,11% 7,91% 4,56% 9,65% 4,30% 7,40% Spain -0,53% 0,47% 0,53% -0,47% -0,59% France -0,03% -0,01% 0,02% 0,01% 0,21% -0,19% -0,11% Croatia -0,10% -3,01% 3,49% -1,76% 1,76% -1,14% -0,67% 1,43% -0,14% -0,55% -2,31% -0,91% -2,74% 3,01% Italy -1,34% 0,89% 1,22% -1,60% -0,71% -2,34% 2,43% 0,32% 1,34% -0,89% -1,22% Cyprus 2,93% 2,53% 6,26% 1,94% 14,08% -30,62% -13,55% 3,28% 31,54% -2,95% Latvia 5,55% -2,04% 14,75% 6,41% -8,79% -0,99% 1,42% -1,59% 0,12% -3,36% 25,23% -5,55% 2,04% -14,75% Lithuania -0,58% -1,38% -5,86% -7,55% -5,48% -8,36% 1,39% 1,47% -1,15% 5,53% 3,65% 0,58% 1,38% 5,86% Luxembourg Hungary 0,56% -1,19% -1,10% -1,21% -3,40% -3,44% -0,52% -1,37% 0,14% 2,32% 2,26% 3,62% -0,56% 1,19% 1,10% Malta -10,81% 11,81% 9,36% Netherlands -0,49% -0,27% -0,33% 0,04% 0,60% 0,49% 0,27% Austria -2,16% -2,19% 1,52% -0,02% -0,12% -1,42% 0,91% Poland 2,66% -3,49% -10,36% -8,94% -6,97% 1,51% -1,95% 1,14% 11,48% 7,36% 6,69% -2,66% Portugal 0,72% 0,79% 0,35% -0,72% Romania 1,50% -0,23% -0,81% -14,68% -5,96% -9,32% -3,06% -3,42% -5,41% 19,48% 9,23% 13,87% 0,23% 0,81% Slovenia -2,71% -1,77% 1,31% -3,64% -4,95% 2,71% 1,77% Slovakia Finland -1,25% -4,65% -1,01% -4,98% -7,29% 3,87% 0,31% 0,46% -0,46% -0,20% -0,93% 4,65% 1,01% Sweden -1,23% -1,71% -1,41% 3,27% 2,56% 2,27% -2,90% -2,08% 1,23% United Kingdom -0,45% -0,63% 0,50% 0,69% 0,84% -0,60% 0,45% TF AFA

Differences between net lending/net borrowing for Total economy (S1) (2014, % of GDP) TF AFA

Differences between net lending/net borrowing for Non-financial corporations (S11) (2014, % of GDP) TF AFA

Differences between net lending/net borrowing for Households and non-profit institutions serving households (S14_S15) (2014, % of GDP) TF AFA

Possible origin of differences Cycles of revisions of non-financial/financial accounts and primary statistics. Non-harmonised sector delimitation. Non-harmonised compilation methods. Difficulties of identifying creditors of some financial assets TF AFA

Conclusions Households and non-profit institutions serving households: differences are often significant. Some countries have decided to reconcile this sector.   Non-financial corporations: differences also large  Financial corporations: data availability is typically better Rest of the world: differences related to the “net errors and omissions” stemming from the balance of payments (b.o.p). TF AFA

Suggested approach Institutional arrangements Reconciliation practices Information on unquoted shares held by the households sector Information on acquisition of non-financial assets Information on non-harmonised compilation methods TF AFA

Suggested approach Methodological notes Transparency TF AFA