The UK's net liability position was -24 per cent of GDP in 2010, placing it 11th in the EU, according to a new article released today by ONS. In terms of overall score, it was 10 percentage points below the EU's average of -14 per cent of GDP.
Between 2000 and 2008, both UK assets and liabilities increased by over three and a half times; gross assets increasing by 275 per cent and gross liabilities by 266 per cent. In 2008 UK assets and liabilities both peaked and topped the £10 trillion mark for the first time. Between the end of 2008 and the end of 2009 both UK assets and liabilities fell as a result of the world recession brought on by the financial crisis; assets dropping by 21 per cent and liabilities by 19 per cent. In 2010 UK assets and liabilities recovered some of the falls recorded in the previous year, to reach £9.9 trillion and £10.3 trillion respectively.
The UK’s net liability position quadrupled between 2000 and 2006. This led to a record net liability position of £384 billion at the end of 2006. By 2008 these increases were reversed to leave the UK with a net liability position of £84 billion; this was the smallest since 1997. The reduction was short lived, as in 2009 the net liability position more than trebled to £304 billion. In the latest year, 2010, the UK’s net liability position increased further to £349 billion. The last time the UK recorded a net assets position was in 1994.
Hungary has the largest net liability position as a percentage of GDP of any EU country (-111 per cent), and Luxembourg the largest net asset position (97 per cent). As the eastern European markets opened up, Hungary, as with many other eastern European countries, was host to large scale direct investments that contributed to increasing their net liability position. Luxembourg’s net asset position on the other hand was driven, at least in some part, by the strength of its financial services sector which has been built on its advantageous tax laws. Of all the 27 EU countries, 20 recorded a net liability position while the remainder recorded a net assets position.
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