The UK national balance sheet estimates: 2014

Annual estimates of the market value of financial and non-financial assets for the UK, providing a measure of the nation's wealth.

This is not the latest release. View latest release

This is an accredited national statistic.

Contact:
Email Wesley Harris

Release date:
20 November 2014

Next release:
To be announced

1. Key points

  • The National Balance Sheet is a measure of the wealth, or total net worth, of the UK. It shows the estimated market value of net financial worth, 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. Estimates in this publication are at current prices and periodicity is annual

  • At the end of 2013, the net worth of the UK was estimated at £7.6 trillion. This was equivalent to an average of £119,000 per person or £289,000 per household

  • Dwellings remained the most valuable non-financial asset in the UK. Dwellings have increased in value in recent years, except for a fall in 2008. At the end of 2013 they accounted for 61% of the UK's net worth

  • The main reason for the increase in the net worth of the UK in 2013 was financial corporations. This sector increased by £421 billion (373%) in 2013. The most valuable financial transaction in this sector was loans with a financial net worth of £1.8 trillion

  • Non-financial corporations provided the largest downward pressure on UK net worth between 2012 and 2013. This can be mainly attributed to a decrease (37%) in ‘equity and investment fund shares/units’

Back to table of contents

2. Introduction

This annual bulletin provides estimates of the market value of financial and non-financial assets in the UK for 2013 without removing the effects of inflation. The National Balance Sheet is a measure of the wealth of the UK and is available by institutional 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, to inform monetary and fiscal policy decisions and for international comparisons.

These estimates are consistent with the 2014 United Kingdom National Accounts (Blue Book) and estimates include European System of Accounts (ESA) 2010 changes. The ESA changes introduced new assets on research and development and weapons systems, which increased UK net worth across the time series.

Estimates are available for the period 1997 to 2013. ONS is working to extend the net capital stock dataset back beyond 1997. This will enable a longer time series of national balance sheet estimates.

The institutional sector and asset breakdown of non-financial corporations (S.11), into public corporations (S.11001) and private non-financial corporations (S.11PR) are unavailable from the capital stocks dataset. As a result, these data, and the totals that are derived from these data, are not shown in the tables accompanying this bulletin.

As part of the continuous improvement process, some data for previous years has 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 provide information on coverage, quality and how to use the data.

Back to table of contents

3. Total net worth

Without removing the effects of inflation, estimates of UK net worth more than doubled from 1997 to 2013. Since 1997 they have risen consistently, with the exception of the economic downturn in 2008 and 2009.

At the end of 2013, the UK was valued at an estimated £7.6 trillion, an increase of 4% (£324 billion) from 2012, which continued the long-term upward pattern. This is consistent with the continued growth in gross domestic product (GDP) during 2013. Non-financial assets increased in value by £343 billion (5%) while net financial assets and liabilities decreased in value by £19 billion (8%). The increase in non-financial assets was largely (61%) due to dwellings.

UK total net worth was equivalent to an average £119,000 per person in 2013.

Back to table of contents

4. Analysis by institutional sector

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

The households and NPISH sector had an estimated net worth of £8.5 trillion in 2013, making it the institutional sector with the highest total net worth. This was equivalent to an average of £320,000 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.

The most valuable assets in this sector were dwellings (£4.4 trillion; 52% of this sector's net worth), insurance, pension and standardised guarantee schemes (£3.1 trillion: 36%) and currency and deposits (£1.4 trillion; 16%).

Non-financial corporations

Non-financial corporations, which are companies other than financial institutions such as banks, had an estimated total net worth of minus £1,186 billion at the end of 2013.

The estimated net financial worth has decreased since 1997 by £1.6 trillion (98%). This meant that non-financial corporations owed nearly twice as much in current prices at the end of 2013 than they did at the end of 1997.

Between the end of 2012 and 2013, the estimated financial value of assets decreased by £425 billion (16%). This was from a decrease of £468 billion (37%) in the net worth of ‘equity and investment fund shares/units’, which was partly offset by increases in the net worth of other financial assets and liabilities. ‘Equity and investment fund shares/units’ decreased due to private non-financial corporations (PNFCs) increasing their liabilities in UK unlisted shares as well as reducing their assets by lowering the level of shares held.

Financial corporations

Financial corporations, which include banks, had an estimated total net worth of £533 billion at the end of 2013, an increase of £671 billion since the end of 1997.

The increase of £415 billion in net financial worth in 2013 since 2012 was the largest annual increase in financial corporations in the period 1997 to 2013. This was a result of the net financial worth ‘debt securities’, ‘equity and investment fund shares/units’ and ‘insurance, pension and standardised guarantee schemes’ all increasing by over £150 billion each in the period 2012 to 2013. These increases were partly offset by decreases in other assets.

General, central and local government

General government continued to place downwards pressure on the UK net worth at the end of 2013. The estimated net worth of the general government sector was minus £158 billion, meaning that the Government owed more than it owned in assets.

General government’s net financial worth decreased by £13 billion in 2013, its lowest annual decrease since 2003. General government’s non-financial assets increased by £37 billion (4%) between 2012 and 2013, mainly due to an increase in the value of other buildings and structures (£28 billion).

Central government net worth is estimated to have declined in every year since 2001. Figure 2 shows that, without removing the effects of inflation, central government’s estimated net worth was minus £663 billion at the end of 2013, a decrease of 0.2% on the previous year and over eight times less than its net worth in 2006 (£82 billion).

Local government net worth has increased gradually since 2001 with the exception of decreases in 2002, 2008 and 2009.

Back to table of contents

5. Analysis by type of asset

It is not possible in this section to write commentary on every asset collected as part of the national balance sheet. Instead, the focus is placed on four assets:

  • dwellings

  • other buildings and structures

  • machinery, equipment and weapons systems

  • financial derivatives and employee stock options

Dwellings

Dwellings remained 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 2013 their value was estimated at £4.7 trillion, over three times their estimated value in 1997 (£1.4 trillion), 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. Between the end of 1997 and the end of 2013, the simple average house price in the UK increased by 234% in comparison to the asset dwellings which increased by 227%.

Other buildings and structures

The estimated value of ‘other buildings and structures’ increased by £86 billion (5%) to £1.7 trillion at the end of 2013 compared with 2012. ‘Other buildings and structures’ includes 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 1997 with the exception of 2008, 2009 and 2012. Without removing the effects of inflation, at the end of 2013 these assets were worth over 80% more than their value in 1997.

Machinery, equipment and weapons systems

This asset includes transport equipment, ICT equipment and other machinery, equipment and weapons systems and had a net worth of £814 billion at the end of 2013, an increase of £14 billion (2%) since 2012. There has been steady growth in the value of this asset since 1997, although it has grown more slowly over the period 1997 to 2013 than the other groups of assets in Figure 3.

The ESA10 inclusion of weapons systems in this asset grouping added between £26 billion to £44 billion per year in market value, between 1997 and 2013.

Financial derivatives and employee stock options

A derivative is a contract between two parties whose price is dependent upon one or more underlying assets, such as gold or exchange rates. Derivatives are used to manage risk or for speculation. Activity in these types of financial products often increase at times of uncertainty with financial markets. The estimated value of both the assets and liabilities of financial derivatives decreased by 20% between the end of 2012 and 2013. They remained, however, at a level of nearly twice their 2007 value.

Back to table of contents

6. International comparison

The G7 grouping of major countries has been used to compare the UK with other major economies. Data for net worth, non-financial assets and fixed assets were not available for all the countries shown; Figure 4 therefore shows the ‘produced fixed assets’ for these countries.

Figure 4 shows that all of the G7 countries experienced positive growth in their fixed assets over the period 1997 to 2012 with the exception of the economic downturn in 2008 and 2009.

Figure 5 shows the net worth of G7 economies per person in 2012 converted into pounds sterling. The UK had the highest estimate per person at £115 thousand at the end of 2012, whilst Canada had the lowest at £73 thousand per person at the end of 2012.

Figure 6 shows the financial net worth of G7 economies at the end of 2012 converted into pounds sterling. Japan had the highest financial net worth at £2.2 trillion, while France had the lowest (minus £0.3 trillion). A positive financial net worth means that the value of the financial assets out-weigh the value of the liabilities. At the end of 2012 the UK along with Canada, Italy and France had a negative financial net worth. This means that these countries owed more than they held in assets.

Back to table of contents

7. Summary tables

Back to table of contents

8 .Background notes

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

  2. General information

    The national balance sheet data were published in Chapter 10 of the United Kingdom National Accounts: Blue Book. An error has been identified in the publication of National Balance Sheet data for ICT equipment, intellectual property products and other machinery, equipment and weapons systems in Blue Book 2014. ONS apologises for the inconvenience that this error may cause and will correct it as soon as possible. This publication includes corrected estimates.

    The population estimate used to derive net worth per head is consistent with the mid-2013 population estimates, at 64.1 million.

    The household estimate of 26.414 million used to derive net worth per household is consistent with the 2013 Families and Households dataset for mid-2013.

    Data on simple average house prices comes from taking the quarter 4 data from table 11 'Simple average house prices, by new/other dwellings, type of buyer and region, United Kingdom' from the House Price Index dataset.

    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.

  3. What’s new?

    These estimates are consistent with the 2014 United Kingdom National Accounts (Blue Book) and estimates include European System of Accounts (ESA) 2010 changes.

    The ESA10 changes have caused an expansion of the definition of GFCF, and as a result, GFCF, capital stocks and the national balance sheet have increased in level, compared with estimates compiled under ESA95. Research and development adds between £29 billion (0.7% of net worth) and £62 billion (0.9%) annually in current prices between 1997 and 2012.

    The inclusion of military weapons systems has also had an impact on capital stock levels and on the national balance sheet. It has added £26 billion (0.6% of net worth) to £44 billion (0.8%) per year in current prices, between 1997 and 2012. Weapons are a component of the asset ‘ICT, machinery, equipment and weapons systems’ which was previously titled ‘other machinery and equipment’.

    This publication is now consistent with the net capital stock figures published on 14 November 2014. This affects the assets ‘intellectual property products’ and ‘machinery, equipment and weapons systems’. This change increases the data by between £58 billion (0.8% of net worth) and £97 billion (3.0%) a year for ‘intellectual property products’, excluding ‘research and development’ and between £38 billion (0.7%) and £93 billion (2.0%) for ‘machinery, equipment and weapons systems’, excluding ‘weapons systems’.

    There have been a number of improvements to the methodology for estimating capital stocks which has impacted on the assets mentioned above in the national balance sheet.

    The most significant changes can be summarised as:

    • changes to the estimation of GFCF
    • changes to the level of detail in the PIM, changes to the methods for estimation of breakdowns by institutional sector
    • changes to the deflation methodology

    A full explanation of these changes, including assessments of impact are available in the articles methodological changes to the estimation of capital stocks and consumption of fixed capital and impact of the methodological changes to the estimation of capital stocks and consumption of fixed capital.

    The value of the electro-magnetic spectrum sale for 4G was included in AN.2151 radio spectra in 2013, this increased net worth by an estimated £2.3 billion (0.03% of net worth).

    There have also been changes to inventories as explained in the September 2014 article. This changes the data by between minus £9.7 billion (0.3% of net worth) and £4.4 billion (0.1%) a year between 1997 and 2012.

    Overall the impact of these changes added between £185 billion (3.1% of net worth) and £257 billion (6.4%) a year to total UK net worth between 1997 and 2012.

    Pensions. There have been large changes to Pensions which are outlined in the April 2014 and September 2014 articles.

    National balance sheet estimates are available for the period 1997 to 2013. ONS is working to extend the net capital stock dataset back beyond 1997. This will enable a longer time series of national balance sheet estimates.

    The institutional sector and asset breakdown of non-financial corporations (S.11), into public corporations (S.11001) and private non-financial corporations (S.11PR) is unavailable from the capital stocks dataset. As a result, these data and the totals that are derived from these data are not shown in the tables accompanying this bulletin.

  4. 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 produced and non-produced, non-financial assets.

    Produced non-financial assets include:

    • dwellings
    • other buildings and structures
    • machinery and equipment
    • weapons systems
    • cultivated biological resources
    • transport equipment
    • intellectual property products
    • inventories

    Non-produced non-financial assets:

    • radio spectra
    • cherished or personalised licence plates

    Financial assets include:

    • means of payment, such as currency
    • financial claims, such as loans
    • economic assets, which are close to financial claims in nature, such as shares
  5. 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). ONS 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 ONS 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.

  6. Use of the data

    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.

  7. 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 ONS 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. This is especially important as different countries adopt ESA10 changes in different years.

    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
    • 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.

  8. 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
    • 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.

  9. Revisions

    There are several revisions to the data for 2012. 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 (43.3 Kb Pdf) .

  10. Continuous improvement

    During continuous improvement work for this output, two corrections and a revision were made to the dataset between 1997 and 2012. This is the earliest opportunity that has arisen to incorporate these changes and provide further information to users. These three changes have caused an annual difference of between minus £176 billion (2.6% of net worth) and £8 billion (0.1%) a year between 2000 and 2012. Further information is provided below.

    Double counting (correction). A data source for other buildings and structures was previously misread and double counting occurred from 2006 to 2012. This change is estimated between minus £159 billion (2.4% of net worth) and £35 billion (0.6%) a year.

    Misreporting a unit (correction). A unit was incorrectly reported as another unit when two companies separated. This has been corrected back to 2000. This change is estimated to reduce the value of assets by between £9 billion (0.1% of net worth) and £30 billion (0.6%) per year from 2000.

    Data source (revision). A source of data has changed when calculating the value of ships. Since 2012 ONS has updated using a publically available source from the Department for Transport to estimate the growth from the previous year. This change is estimated to decrease the value of assets by £3 billion (0.05% of net worth) in 2012.

  11. What do you think?

    We are striving to improve this release and its associated commentary. We would welcome any feedback you may have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: gcf@ons.gov.uk or telephone Wesley Harris on +44 (0)1633 455250.

    There is a Business and Trade Statistics community on the StatsUserNet website. StatsUserNet is the Royal Statistical Society’s interactive site for users of official statistics. The community objectives are to promote dialogue between users and producers of official business and trade statistics about the structure, content and performance of businesses within the UK. Anyone can join the discussions by registering via either of the links above.

  12. National Statistics

    The United Kingdom Statistics Authority has designated these statistics as National Statistics, signifying compliance with the Code of Practice for Official Statistics.

    Designation can be broadly interpreted to mean that the statistics:

    • meet identified user needs
    • are well explained and readily accessible
    • are produced according to sound methods
    • are managed impartially and objectively in the public interest

    Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

  13. Social media

    Follow ONS on Twitter and receive up to date information about our statistics.

    Like ONS on Facebook to receive our updates in your newsfeed and to post comments on our page.

  14. Government Statistical Service (GSS) business statistics

    To find out about other official business statistics, and choose the right data for your needs, use the GSS Business Statistics Interactive User Guide. By selecting your topics of interest, the tool will pinpoint publications that should be of interest to you, and provide you with links to more detailed information and the relevant statistical releases. It also offers guidance on which statistics are appropriate for different uses.

  15. Special events

    ONS has published commentary, analysis and policy on 'Special Events' which may affect statistical outputs. For full details visit the Special Events page on the ONS website.

  16. Release policy

    All data in this release can be downloaded free of charge from the ONS website. Here are the instructions to obtain a full time series of data from the statistical bulletin or release pages:

    select 'Data in this release'
    select 'View datasets associated with this release'
    select the latest release
    select 'Select series from this dataset'select the reference table of interest
    select 'View series'
    select the series of interest (Hint: for a custom download you can use SHIFT to select a range of series or CTRL to select multiple individual series)
    select 'View selection'
    select 'Download'

  17. 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.gov.uk

Back to table of contents

9 . Methodology

Contact details for this Statistical bulletin

Wesley Harris
gcf@ons.gov.uk
Telephone: +44 (0)1633 455250