Government finance statistics: net financial worth

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 fourth quarter of 2023, the EU net financial worth stood at -€8 623 billion or -50.8% of gross domestic product (GDP). Compared with the end of the third quarter of 2023, the EU net financial worth decreased by €626 billion. Compared with the end of the fourth quarter of 2022, the EU net financial worth decreased by €888 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.

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 EU general government’s balance sheets are debt securities. As these instruments are traded on the financial markets, their value changes over time and can be volatile.

In recent quarters, at the EU level, the market value of the existing stock of debt securities has tended to decrease, notably due to increases in interest rates and a consequent loss in value of fixed rate bonds. However, at the end of the fourth quarter of 2023, the market value of EU governments’ debt security liabilities increased again mainly due to revaluations (+€584 billion), contributing negatively to the net financial worth. The continued EU general government deficit (net financial transactions, measured as transactions in financial assets minus the transactions in liabilities, -€167 billion) also contributed negatively to the evolution of net financial worth. On the other hand, positive revaluations of equity assets held by EU governments (+€146 billion) partly off-set this in terms of the impact on the change in net financial worth.