Quarterly sector accounts, UK: April to June 2020

• The households saving ratio increased to a record 29.1% in Quarter 2 (Apr to June) 2020, compared with 9.6% in Quarter 1 (Jan to Mar) 2020.

• Households’ consumption spending decreased by £80.5 billion (minus 24.2%) in Quarter 2; this is the largest quarterly fall in nominal household spending ever recorded, driven by large falls in expenditure on restaurants and hotels, transport – particularly air transport and motor vehicles – and recreation and cultural services.

• The households net lending position increased to a record 20.0% of gross domestic product (GDP) in Quarter 2 from 3.0% in Quarter 1.

• General government saw a record increase in their net borrowing position to negative 22.6% of GDP; the main drivers for this increase were the continuation of the Coronavirus Job Retention Scheme (CJRS), the introduction in this quarter of the Coronavirus Self Employment Income Support Scheme (SEISS) and the Small Business Grant Fund.

• Non-financial corporations returned to net lending, 3.2% of GDP, in Quarter 2 as government support through tax deferrals, subsidies and grants combined with reduced capital expenditure outpaced a reduction in gross operating surplus.

• In the financial account, households increased their net lending to £94.8 billion in Quarter 2 as they increased their deposits and currency assets by £44.6 billion together with decreasing their net loans by £20.1 billion.

• In the financial account, general government increased their net borrowing to £128.8 billion in Quarter 2 as it financed its response to the coronavirus (COVID-19) pandemic and fall in tax revenue by issuing £162.7 billion worth of central government gilts.

• Private non-financial corporations increased their financial account net lending to £13.8 billion in Quarter 2 as they increased their deposits and currency assets by £62.1 billion; this was partly offset by increased liabilities of other accounts receivable and payable of £20.2 billion as part of the recording of Value Added Tax (VAT) accruals.

Seasonal adjustment

All figures given in this bulletin are adjusted for seasonality, unless the financial accounts are under discussion or otherwise stated. Seasonal adjustment removes seasonal or calendar effects from data to enable more meaningful comparisons over time.

Current price

Current price series are expressed in terms of the prices during the time period being estimated. These describe the prices recorded at the time of production or consumption and include the effect of price inflation over time.

Chained volume measures

Chained volume series (also known as real terms) have had the effects of inflation removed.

Gross disposable household income (GDHI) and Real household disposable income (RHDI)

Gross disposable household income (GDHI) is the estimate of the total amount of income that households have available to either spend, save or invest including income received from wages (and the self-employed), social benefits, pensions and net property income (that is, earnings from interest on savings and dividends from shares) less taxes on income and wealth.

Adjusting GDHI to remove the effects of inflation gives real household disposable income (RHDI). This is a measure of the real purchasing power of households’ income, in terms of the physical quantity of goods and services they would be able to purchase if prices remained constant over time.

Households’ saving ratio

The saving ratio estimates the amount of money households have available to save as a percentage of their gross disposable income plus pension accumulations.

Net lending or borrowing

The net lending of a sector represents the surplus resources that a sector makes available to other sectors; net borrowing represents their financing of a deficit from other sectors.

Net lending means a sector has money left over after its spending and investment in a given period, whereas net borrowing means it has spent and invested more than it received and has a need for financing, which may be covered by borrowing, issuing shares or bonds, or by drawing on reserves.

Revisions within this release

This bulletin includes new data for the latest available quarter, Quarter 2 (Apr to June) 2020, and revisions to data from the start of a time series to Quarter 1 (Jan to Mar) 2020.

This bulletin follows the National Accounts Revisions Policy.

Understanding the sector and financial accounts

This release presents analysis on UK aggregate data for the main economic indicators and summary estimates from the institutional sectors of the UK economy that are presented in the UK Economic Accounts (UKEA) dataset:

• public corporations
• private non-financial corporations
• financial corporations
• households
• non-profit institutions serving households (NPISH)
• central government
• local government
• rest of the world

This release uses data from the UKEA and provides detailed estimates of national product, income and expenditure, UK sector, non-financial and financial accounts, and UK Balance of Payments. These accounts are the underlying data that produce a single estimate of gross domestic product (GDP) using income, production and expenditure data.

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Quarterly sector accounts QMI report.