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Statistical bulletin: National Balance Sheet, 2013 Estimates This product is designated as National Statistics

Released: 15 August 2013 Download PDF

National Balance Sheet, 2013 Estimates

  • The National Balance Sheet is a measure of the wealth, or total net worth, of the UK. It shows the estimated market value of financial assets, for example shares and deposits, and non-financial assets, for example dwellings and machinery. Market value is an estimate of how much these assets would sell for, if sold on the market.
  • Without removing the effects of inflation, estimates of UK total net worth more than trebled in the 25 years from 1987 to 2012.
  • UK total net worth at the end of 2012 was estimated at £7.3 trillion; this was equivalent to approximately £114,000 per head of population or £275,000 per household.
  • The main reason for the increase in the UK total net worth between 2011 and 2012 was the increase in the estimated net worth of households and non-profit institutions serving households, for example charities, universities and churches.
  • Non-financial corporations provided the largest downward pressure on total UK net worth between 2011 and 2012. This was mainly attributed to decreases in their estimated net worth of shares and other equity, which decreased by nearly 20%.
  • Dwellings were the most valuable non-financial asset in the UK. They have steadily increased in value in recent years, except for a fall in 2008. In 2012 they were 60% of the value of UK non-financial assets.
  • As part of the continuous improvement process, some data for previous years have been revised; further details are available in the background notes section.

Introduction

This annual bulletin provides estimates of the market value of financial and non-financial assets in the UK for 2012. This is a measure of the wealth of the UK and is available by sector, for example households and non-financial corporations, and type of asset, for example dwellings, transport equipment and loans. The data are used to monitor economic performance, inform monetary and fiscal policy decisions as well as for international comparisons.

Up until 2011, this bulletin was named ‘Non-Financial Balance Sheets’; it now includes both financial and non-financial assets and was renamed to National Balance Sheet in 2012.

Non-financial assets include both tangible and intangible assets.
Tangible assets include:

  • property;

  • machinery and equipment;

  • agricultural assets;

  • vehicles;

  • certain types of farming stocks (mainly dairy cattle and orchards); and

  • military equipment whose use is not solely destructive.

Intangible assets include:

  • computer software;

  • patents;

  • mineral exploration; and

  • artistic originals.

Financial assets include:

  • means of payment, such as currency;

  • financial claims, such as loans; and

  • economic assets, which are close to financial claims in nature, such as shares.

Each financial asset has an equivalent liability, with the exception of monetary gold and special drawing rights.

As part of the continuous improvement process, some data for previous years have been revised; further details are available in the background notes section.

The dataset for this bulletin is available in the accompanying spreadsheet as well as in Chapter 10 of the United Kingdom National Accounts: Blue Book. Background notes are toward the end of this bulletin and provide information on coverage, quality and how to use the data.

Total net worth

Without removing the effects of inflation, estimates of UK total net worth more than trebled in the 25 years from 1987 to 2012. Since the mid-1990s they have risen consistently with the exception of decreases during the economic downturn in 2008 and 2009.

Demand remained subdued throughout 2012. The UK was influenced by international factors such as the challenging economic conditions within the European Union and some volatility in food and commodity prices. Despite these pressures upon households and the negative contribution by general government, the total net worth of the UK increased. It should be noted that these figures are in current prices and are therefore not adjusted to remove the effect of price changes, that is inflation.

At the end of 2012, the UK was valued at an estimated £7.3 trillion, an increase of 1% from 2011, which continues the long-term upward pattern. This is in line with recent weak economic growth of the UK economy as shown by annual growth in gross domestic product (GDP) of 0.2% in 2012, following growth of 1.1% in 2011.

UK total net worth was equivalent to approximately £114,000 per head of population in 2012.

The estimated increase in UK net worth between 2011 and 2012 was £74 billion. Non-financial assets increased in value by £225 billion over the same period while net financial assets and liabilities decreased in value by £150 billion. The decrease in net financial assets and liabilities was largely due to the change in the net worth of loans in financial corporations.

Figure 1: Estimated UK total net worth 1987-2012 at current prices

Figure 1: Estimated UK total net worth 1987-2012 at current prices
Source: Office for National Statistics

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National Balance Sheet: Analysis by sector

Households and non-profit institutions serving households (NPISH) sector

The households and NPISH sector had an estimated total net worth of £7.6 trillion in 2012, making it the sector with the highest total net worth. This was equivalent to £288,000 per household. NPISH consists of organisations such as charities, universities, churches and trade unions, which provide services to households either free or at non-economically significant prices.

Approximately 55% of household wealth can be attributed to dwellings.

The most valuable assets in this sector were dwellings (£4.2 trillion), insurance technical reserves (£2.4 trillion) and currency and deposits (£1.3 trillion). Insurance technical reserves represent the amount that insurance companies and pension funds owe to their policy holders in the form of prepayments of premiums, and reserves against outstanding claims; the latter representing the present value of the amounts expected to be paid out in settlement of claims.

The increase in the estimated net worth of households and NPISH was the main reason for the increase in the estimated UK total net worth between 2011 and 2012. The estimated net worth of households increased by £410 billion between 2011 and 2012. In comparison, the estimated net worth for the UK only increased by £74 billion because of decreases in other sectors.

The estimated £410 billion increase between 2011 and 2012 resulted from increases in a number of different assets. The largest increase in household and NPISH net worth was in the value of dwellings, which increased by £160 billion. An increase in insurance technical reserves added an estimated £147 billion, while currency and deposits saw an increase of an estimated £60 billion.

Non-financial corporations

Non-financial corporations, which are companies other than financial institutions such as banks, had an estimated total net worth of minus £253 billion at the end of 2012. The estimated net worth of companies’ non-financial assets, such as plant and machinery and other structures, has increased steadily over time, with the exception of 2008 and 2009. The estimated net worth of their financial assets, such as loans and shares, has been more variable as companies added to or reduced the amount they owed.

Between the end of 2011 and 2012, the estimated net worth of shares and other equity owed by private non-financial corporations decreased by £220 billion or approximately 20% due to liabilities held in shares and other equity increasing more rapidly than assets. This was the largest downward pressure on estimated total UK net worth in 2012.
 

Financial corporations

Financial corporations, which include banks, had an estimated total net worth of £221 billion in 2012. The estimated net worth of this sector fell by nearly a third compared with 2011 but was still the second highest net worth since 1987. The net position in ‘securities other than shares’ increased for the fifth consecutive year, to £1,600 billion; this was over three times its net worth compared with the end of 2007. ‘Securities other than shares’ includes items such as derivatives. A derivative is a contract between two parties whose price is dependent upon one or more underlying assets, such as gold, wheat or exchange rates. They are used to manage risk or for speculation.

General, central and local government

General government continued to place downwards pressure on UK total net worth in 2012. However, the rate of decline eased in 2012 compared with 2011. The continued decline in net worth was due in part to the lack of a significant recovery during 2012. The resultant shortfall in tax revenue required government to issue bonds to cover spending, increasing its total liabilities and causing its net worth to decline.

Estimated central government net worth declined in every year since 2001; in contrast, estimated local government net worth increased gradually over the same period with the exception of decreases in 2008 and 2009.

The decline in central government total net worth was mainly attributed to the increased amount owing due to the number of government bonds issued to fund government spending. Because of the marked contraction of the economy during the 2008-09 economic downturn, the amount of tax collected over recent years was considerably less than spending.

The estimated total net worth of the government sector decreased to minus £305 billion at the end of 2012, meaning that government owed more than it owned in assets. Since the end of 2011, there was a decrease of £63 billion in the net value of financial assets and liabilities, mainly due to central government’s increased liabilities in ‘securities other than shares’, which includes government bonds. The decrease in financial assets for general government was partly offset by an increase of £30 billion in the value of non-financial assets, mainly due to an increase in the value of other buildings and structures.

Figure 2 below shows that, without removing the effects of inflation, central government’s estimated total net worth was approximately minus £830 billion at the end of 2012, a decrease of 7% on the previous year and nearly five times less than its total net worth in 2006.

Figure 2: Central government net worth 1987-2012 at current prices

Figure 2: Central government net worth 1987-2012 at current prices
Source: Office for National Statistics

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National Balance Sheet: Analysis by type of asset

Dwellings

Dwellings remain the most valuable non-financial asset in the UK. They have steadily increased in value in recent years, except for a decrease in 2008. In 2012 their value was estimated at £4.4 trillion, nearly four times the £1.2 trillion value in 1992, without removing the effects of inflation. The household and NPISH sector accounts for 95% of this asset’s value. The increase in the value of dwellings was influenced by changes in the market values placed on these assets.

Other buildings and structures

Other buildings and structures include non-residential buildings such as warehouses as well as other structures such as roads, railways, pipelines, bridges and sports stadiums. The estimated value of other buildings and structures has increased each year since the mid-1990s with the exception of 2008 and 2009. Without removing the effects of inflation, in 2012 these assets were worth nearly two and a half times their value in 1992.

The estimated value of non-residential buildings decreased in 2012 as a result of a decrease in commercial property prices. The estimated value of other structures increased mainly due to an increase in the value of infrastructure assets in the water and gas industries.
 

Machinery and equipment

Machinery and equipment includes transport equipment and plant and machinery. There has been a steady growth in the value of this group of assets since 1987, although it has grown more slowly over the period 1992 to 2012 than the other groups of assets in figure 3 below.

Without removing the effects of inflation, the estimated value of transport equipment, such as cars, lorries, trains and aircrafts, increased by 11% between 2011 and 2012. This increase was in part due to an increased number of cars purchased during 2012.

Figure 3: Value of non-financial assets, end 1992, 2002 and 2012, at current prices

Figure 3: Value of non-financial assets, end 1992, 2002 and 2012, at current prices
Source: Office for National Statistics

Notes:

  1. All other assets include cultivated assets, other intangible fixed assets, inventories and non-produced assets.

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Loans

The estimated value of loan assets has increased in every year since 1987 with the exception of 2009, 2011 and 2012. The decrease in overall net financial assets and liabilities between 2011 and 2012 was largely due to the change in the net worth of loans in financial corporations.

Securities other than shares

These were the financial assets and liabilities with the largest value and include items such as derivatives. A derivative is a contract between two parties whose price is dependent upon one or more underlying assets, such as gold, wheat or exchange rates. They are used to manage risk or for speculation. Activity in these types of financial products increases with uncertainty on the financial markets. The estimated value of both assets and liabilities fell by 9% and 10% respectively between 2011 and 2012. They however remain at a level that is approximately double their 2007 value; this may reflect the continuing economic uncertainty.

Summary tables

Table 1: Estimated UK total net worth by sector, at end 2012 (£ billion)

Sector Net worth
Households and NPISH 7,610.7
Non-financial corporations -252.7
Financial corporations 221.2
General government -304.5
   Of which: Central government -830.4
   Of which: Local government 525.8
Total 7,274.7

Table source: Office for National Statistics

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Table 2: Financial assets, end 2012, at current prices (£ billion) (1)

  Asset value Liability value Net value
Monetary gold and SDRs (2) (3) 19 - 19
Currency and deposits 6,553 6,775 -222
Securities other than shares 10,474 10,539 -65
Loans 4,246 4,444 -198
Shares and other equity 4,257 3,934 323
Insurance technical reserves 2,448 2,456 -9
Other accounts receivable 377 368 9
Total 28,374 28,516 -142

Table source: Office for National Statistics

Table notes:

  1. Figures may not add due to rounding.

  2. - = not applicable.

  3. SDR = Special drawing rights.

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Background notes

  1. In addition to the information below, further information is available in the non-financial balance sheet quality report.

  2. The national balance sheet data were previously published in Chapter 10 of the United Kingdom National Accounts: Blue Book.

  3. The population estimate used to derive net worth per head is consistent with the mid-2012   population estimates, at 63.7 million, published on the ONS website.

  4. The household estimate used to derive net worth per household is consistent with table H01UK from the 2011 Census results, published on the ONS website. Note that the definition of ‘household’ was updated at the 2011 Census to also include certain sheltered accommodation and those who use caravans as their usual residence. Further details are available on the ONS website (98.4 Kb Pdf) .

  5. The net worth estimates of the UK economy exclude ‘human capital’, that is the value of knowledge, skills and know-how, and ‘environmental or natural capital’.  Further information on human capital is available from the ONS website.

  6. What's new?

    • There have been three changes to the asset AN.229 ‘Other intangible non-produced assets’ within non-financial assets. 

    • Firstly, data on personalised or cherished number plates for vehicles has been added as an asset for households and NPISH. This added £2.3 billion to the total net worth of the UK in 2012.

    • Secondly, the value of the electro-magnetic spectrum sale for 3G was brought in line with other parts of national accounts. It was previously reported as £21.9 billion and it is now shown as £22.5 billion, an increase of £0.6 billion to UK total net worth.

    • Finally the ownership of the electro-magnetic spectrum has been re-classified from central government to private non-financial corporations, namely the mobile phone companies which bought the licences. This has no impact on UK total net worth.

    • Overall the impact of these changes added approximately £2.8 billion to total UK net worth, equivalent to an increase of 0.04%.

  7. Understanding the data

    Short guide to the national balance sheet

    • The national balance sheet data shows the estimated market value of financial and non-financial assets, that is, what these assets would realise if sold at market value.

    • Non-financial assets include both tangible and intangible assets.

    Tangible assets include:

    • property; 

    • machinery and equipment; 

    • agricultural assets; 

    • vehicles; 

    • certain types of farming stocks (mainly dairy cattle and orchards); and 

    • military equipment whose use is not solely destructive.

    Intangible assets include:

    • computer software; 

    • patents; 

    • mineral exploration; and 

    • artistic originals.

    Financial assets include:

    • means of payment, such as currency; 

    • financial claims, such as loans; and 

    • economic assets, which are close to financial claims in nature, such as shares.

    Each financial asset has an equivalent liability, with the exception of monetary gold and Special Drawing Rights.

  8. Interpreting the data

    International Financial Reporting Standards

    The International Financial Reporting Standards (IFRS) were introduced from 2005 onwards in the UK. IFRS is the legally required financial reporting framework for the consolidated accounts of EU listed groups of companies. IFRS differs in some respects from the UK financial reporting standards (UK GAAP). The Office for National Statistics established an IFRS Taskforce to examine the impact of transition and their report outlines the differences between the two financial reporting frameworks.

    The impact on the national balance sheet is difficult to assess as the impact of the transition to IFRS varies by company. Subsequent work by the Office for National Statistics provided little evidence that material differences would occur as a result of the transition. On this basis, the transition to IFRS should not prevent time series analysis of the national balance sheet dataset.

  9. Use of the data

    The value measures of the national balance sheet estimates are used in private and public sector institutions, the Statistical Office of the European Communities (Eurostat), Bank of England and Her Majesty’s Treasury. The data are used to monitor economic performance, inform monetary and fiscal policy decisions as well as for international comparisons.

  10. Comparability

    The UK aims to produce the national balance sheet to correspond with international standards, namely the System of National Accounts (SNA) and the European System of Accounts (ESA). The UK is currently unable to produce a complete dataset. The Office for National Statistics will continue to work to improve the completeness of this dataset as described in the 2012 article. A full list of non-financial assets, including those that the UK cannot currently provide is available on the Eurostat website.

    Both Eurostat and the OECD hold internationally comparable data for both financial and non-financial balance sheets. When comparing between countries, users should ensure that they are comparing figures in the same currency and that there are no definitional differences noted.

    The Wealth and Assets Survey (WAS) is a longitudinal household survey, which gathers information on, among other things, level of savings and debt, saving for retirement, how wealth is distributed among households and factors that affect financial planning. WAS produces estimates of the wealth of the household sector and of property wealth within this sector. The National Balance Sheet (NBS) produces estimates for the household and NPISH sector which includes data on dwellings. These estimates are different because:

    • NBS shows data for the UK, whereas WAS only covers Great Britain;

    • WAS uses a survey of households, whereas NBS uses existing data sources, for example on house prices;

    • The estimate of property prices may be higher in the WAS as the price is based on the perception of the person answering the survey compared with actual selling prices which are used in the calculation of the NBS data;

    • WAS includes overseas property and land owned by respondents, whereas NBS only covers dwellings and assets in the UK;

    • The WAS includes the estimated value of the contents of houses, such as washing machines, computers, furnishings, etc., whereas this is not included in the NBS; and

    • The WAS estimates data for informal financial arrangements, such as loans between family members, which are not included in the NBS.

    More information on the methods as well as the data for the Wealth and Assets Survey is available on the ONS website.

  11. Data sources 

    Data sources for the compilation of the national balance sheet include:

    • Other government departments and agencies;

    • Annual reports of public corporations and major businesses;

    • Industry publications; and

    • Chartered Institute of Public Finance and Accountancy report on Local Authority Assets.

    Where non-financial asset market valuations are not readily available, the UK net capital stocks data modelled in the Perpetual Inventory Method (PIM) (189.1 Kb Pdf) within ONS is used as a proxy. For central government, data are taken from returns made by government departments to HM Treasury.

  12. Revisions

    There are several revisions to the data for 2011. This is the result of more up-to-date data being available since last year. A full explanation of the national accounts revision policy is available on the ONS website (41.7 Kb Pdf) .

  13. Continuous improvement

    • During continuous improvement work for this output, several revisions and corrections were made to the dataset from 1987 to 2012. This is the earliest opportunity that has arisen to incorporate these changes and provide further information to users. The overall impact is not straightforward to understand as the revisions and corrections affect more than one year. The year most affected was 2011, with an estimated increase of £127 billion, which is equivalent to 1.7% of UK total net worth in that year. 1987 also had large corrections and it is estimated that they led to an increase of about £334 billion, equivalent to 17% of UK total net worth in that year. Further information is provided below.

    • Cultivated assets. The data source for the value of agricultural land was updated. This now uses annual data from the Department for Environment, Food and Rural Affairs (DEFRA). It previously used historic data from DEFRA and estimated data for later years. The impact of this change was to reduce the previous estimated value of agricultural land by about 40% up to 1993. After 1993, the new estimated value increases gradually compared with the previous estimate. In 2011, the new estimated value added £140 billion to UK total net worth. This affects all previous publications.

    • Central Government data. Due to a data processing error, data for assets within health were incorrectly included in 2010 and 2011. This correction added approximately £2.4 billion to UK net worth for 2010 and 2011. This affects publications in 2011 and 2012.

    • Double counting. In two cases, the assets of the first organisation transferred to the second in 2008 however from 2008 to 2011 the assets were recorded for both organisations, hence double counting. The double counting has now been corrected and this removed between £3.9 and £6.4 billion from UK net worth in each year between 2008 and 2011. This affects all publications from 2009 to 2012.

    • Estimation of airport assets. An error was found in the calculation of data for some airports in 2011. This has been corrected and including other revisions to airport asset values, it reduces the estimated value of non-residential buildings by approximately £12 billion. This affects only the 2012 publication.

    • Non-residential buildings in 1987 were incorrectly shown as a negative asset value for the public non-financial corporations sector. This has now been corrected and has an impact on the non-residential buildings data for 1987 to 1991. The correction increased UK net worth in 1987 by £346 billion and between 1988 and 1991 it changes UK net worth by between minus £28 billion and £37 billion. This affects all publications from 2005 to 2012.

    • Aircraft data. The data on aircraft within transport equipment has been corrected to include missing data for 1987. This had the effect of changing the entire time series. The largest change was an increase of about £2.5 billion in 1987. This affects all publications from 2005 to 2012.

  14. Code of Practice

    National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

  15. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Statistical contacts

Name Phone Department Email
Wesley Harris +44 (0)1633 455250 Office for National Statistics gcf@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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