The UK national balance sheet estimates: 2015

• 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, such as loans, and non-financial assets, such as dwellings. Market value is an estimate of how much these assets would sell for, if sold on the market

• The estimates in this release cover the period 1997 to 2014. All data referred to in this bulletin are annual estimates at current prices

• At the end of 2014, the total net worth of the UK was estimated at £8.1 trillion. This was equivalent to an average of £125,000 per person or £302,000 per household

• Dwellings remained the most valuable non-financial asset in the UK at £5.1 trillion, accounting for 63% of the UK’s total net worth at the end of 2014. Dwellings increased in value by £408 billion (9%) over the period 2013 to 2014

• The households and non-profit institutions serving households (NPISH) sector provided the largest increase in the total net worth of the UK in 2014. This sector increased in value by £1.03 trillion (12%) over the period 2013 to 2014

• Financial corporations placed the largest downward pressure on the total net worth of the UK between 2013 and 2014. This can be mainly attributed to a decrease of £175 billion (16%) in their estimated financial net worth of “equity and investment fund shares/units”

This annual bulletin provides estimates of the market value of financial and non-financial assets in the UK for the period 1997 to 2014. The National Balance Sheet is a measure of the wealth of the UK and is available by institutional sector, for example, households and non-profit institutions serving households (NPISH) and type of asset, for example, dwellings and loans. The data are used to monitor economic performance, to inform monetary and fiscal policy decisions and for international comparisons.

All data referred to in this bulletin are annual estimates at current prices and include changes in prices as well as in the volume of assets.

These estimates are consistent with the 2015 UK National Accounts (The Blue Book). The dataset for this bulletin is available in the accompanying spreadsheet as well as in Chapter 9 of the Blue Book. Background notes provide information on coverage, quality and how to use the data.

The institutional sector and asset breakdown of non-financial corporations, into public non-financial corporations and private non-financial corporations are not available from the net 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, there are revisions to the estimates for the period 1997 to 2013; further details are available in the background notes section.

Estimates of UK total net worth more than doubled in the 15 years from 1999 to 2014, at current prices. Since 1997, they have risen consistently until the economic downturn in 2008 and 2009. From 2010 onwards they have risen in most years, with the exception of 2012.

At the end of 2014, the UK was valued at an estimated £8.1 trillion, an increase of 5% (£385 billion) compared with 2013, which continued the long-term upward pattern. This is consistent with the continued growth in the value of gross domestic product (GDP) at current prices during 2014.

The estimated value of non-financial assets increased by £595 billion (8%) while the estimated financial net worth decreased by £210 billion (86%). The increase in the value of non-financial assets was largely due to dwellings which contributed to 63% of the UK total net worth at the end of 2014.

UK total net worth was equivalent to an average of £125,000 per person or £302,000 per household in 2014, compared with £120,000 per person or £288,000 per household in 2013.

Households and non-profit institutions serving households (NPISH)

The households and NPISH sector had an estimated net worth of £9.4 trillion at the end of 2014, making it the institutional sector with the highest total net worth. This was equivalent to an average of £354,000 per household in 2014 compared with £316,000 per household in 2013.

NPISH consist of organisations such as charities, universities, churches and trade unions, which provide goods and services to households either free or at non-economically significant prices.

The most valuable assets in this sector were dwellings (£4.8 trillion; 51% of this sector’s net worth), “insurance, pension and standardised guarantee schemes” (£3.5 trillion; 37%) and “currency and deposits” (£1.4 trillion; 15%).

The estimated net worth of households and NPISH increased by £1.03 trillion (12%) between 2013 and 2014, which was the largest annual increase since 2008 and the main reason for the increase in the total net worth of the UK. In comparison, the estimated total net worth of the UK only increased by £385 billion because of decreases in other sectors.

The increase in the estimated net worth of households and NPISH in 2014 resulted from increases in a number of different assets. The largest increase was in the net value of “insurance, pension and standardised guarantee schemes” which increased by £501 billion (17%) due to an increase in the asset value to £3.5 trillion compared with £3.0 trillion at the end of 2013. See background note 2 for further information. The value of dwellings saw an increase of £403 billion (9%) compared with 2013.

Non-financial corporations

The non-financial corporations sector had an estimated net worth of minus £732 billion at the end of 2014, a decrease of £54 billion (8%) compared with 2013.

The non-financial sector is broken down into 2 sub-sectors: public and private. Non-financial corporations produce goods and services for final or intermediate consumption expenditure and include businesses such as retailers, manufacturers, utilities and construction companies, amongst others.

At the end 2014, the most valuable asset of non-financial corporations was “other buildings and structures” at £939 billion (45% of this sector’s total non-financial assets), which increased by £124 billion (15%) compared with £814 billion at the end of 2013.

This increase was offset by decreases of £154 billion in the net value of “insurance, pension and standardised guarantee schemes” and £133 billion in the net value of “equity and investment fund shares/units”.

Financial corporations

The financial corporations sector had an estimated net worth of minus £197 billion at the end of 2014, a decrease of £364 billion (219%) compared with 2013. This was the largest annual decrease and the first negative net worth for financial corporations since 2006.

Financial corporations are institutional units whose principal activity is the production of financial services and, for example, include banks, building societies and insurance companies.

The financial net worth of financial corporations decreased by £367 billion to minus £360 billion in 2014 compared with £7 billion in 2013 and was the main contributing factor for the fall in this sector. This was a result of a decrease of £353 billion in the net value of “insurance, pension and standardised guarantee schemes” due to an increase in the liability value to £3.6 trillion in 2014 compared with £3.1 trillion in 2013.

There was also a decrease of £175 billion in the net value of “equity and investment fund shares/units”, but this was mostly offset by an increase of £158 billion in the net value of “debt securities” over the period 2013 to 2014.

General government

General government continued to place downward pressure on the UK total net worth in the period 2013 to 2014. The estimated net worth of the general government sector decreased to minus £450 billion at the end of 2014, meaning that the government continued to owe more than it owned in assets.

General government’s estimated financial net worth decreased by £255 billion (21%) to minus £1.5 trillion in 2014 compared with minus £1.2 trillion in 2013, the largest annual decrease since 2011. This was mainly due to central government’s increased liabilities in “debt securities”. The most valuable non-financial asset of general government was “other buildings and structures” at £766 billion and accounted for 75% of this sector’s total non-financial assets at the end of 2014.

The general government sector is broken down into 2 sub-sectors: central and local. General government includes government departments and agencies, local authorities, the armed forces, and the police, amongst other public bodies.

Central government’s net worth is estimated to have declined in every year since 2001. Figure 2 shows that the estimated net worth of the central government sub-sector was minus £1,009 billion at the end of 2014. This was a decrease of 34% on the previous year and over 6 times less than its net worth in the pre-downturn period of 2007 (minus £148 billion).

Local government’s estimated net worth has increased gradually since 2002 with the exception of decreases in 2008 and 2009, during the economic downturn. At the end of 2014, the estimated net worth of the local government sub-sector was £559 billion and this was its highest value since its peak in 2007.

In this release, the focus is placed on the analysis of 5 assets:

• dwellings

• other buildings and structures

• machinery, equipment and weapons systems

• equity and investment fund shares/units

• financial derivatives and employee stock options

Dwellings

Dwellings remained the most valuable non-financial asset in the UK. They steadily increased in value between 1997 and 2014, except for a decrease in 2008. The value of dwellings was estimated at £5.1 trillion at the end of 2014, over 3 times their estimated value in 1997 (at £1.4 trillion). The households and non-profit institutions serving households (NPISH) sector accounts for 95% of this asset’s value. The increase in the value of dwellings was largely due to increases in house prices rather than a change in the volume of dwellings. Between the end of 1997 and the end of 2014, the simple average house price in the UK increased by 249% in comparison with the value of dwellings which increased by 255%.

Other buildings and structures

The estimated value of “other buildings and structures” increased by £158 billion (9%) to £1.9 trillion in 2014 compared with £1.7 trillion in 2013. The value of these assets accounted for 24% of the UK’s total net worth at the end of 2014. “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. These assets have doubled in value since 1997 from £947 billion to £1.9 trillion at the end of 2014.

Machinery, equipment and weapons systems

This asset group includes “transport equipment”, “information and communication technology (ICT) equipment” and “other machinery, equipment and weapons systems” and had an estimated net worth of £850 billion at the end of 2014, an increase of £6 billion since 2013. The value of these assets accounted for 11% of the UK’s total net worth at the end of 2014. There has been steady growth in the value of these assets since 1997 with the exception of 2013 which was relatively flat. This group has grown more slowly since 2009 than the other groups of non-financial assets in Figure 3.

Equity and investment fund shares/units

Equity and investment fund shares/units relate to the issuance and holdings of listed and unlisted shares, other UK equity and mutual funds units/shares. In 2014 the estimated net worth of these assets fell by £218 billion (71%) to £90 billion in 2014 compared with £308 billion in 2013. This was the largest annual decrease since 1997. The decrease in the total financial net worth of the UK was largely due to the change in the net value of these assets. This is a result of the asset value decreasing with a corresponding increase in the liability value of “equity and investment fund shares/units” in both the financial corporations and private non-financial corporations sectors.

Financial derivatives and employee stock options

A derivative is a contract between 2 parties whose value is derived from 1 or more underlying assets, commodities or currency. Derivatives are in general either used to hedge risks or to speculate on changes in prices. Activity in these types of financial products often increase at times of uncertainty with the financial markets. The estimated net worth of “financial derivatives and employee stock options” decreased by £25 billion (53%) to £22 billion in 2014 compared with £48 billion in 2013. They however, remain at a level that is higher than their value in 2007 (minus £14 billion) which may reflect the continuing economic uncertainty.

In this section, the net worth of the UK is compared with the net worth of the other G7 countries. Estimates for non-produced assets and inventories, and hence net worth, were not available for all the countries shown. Figures 4 and 5 therefore show the produced fixed assets for these countries.

Figure 4 shows as of the end of 2013, all G7 countries had returned to positive growth after the economic downturn of 2008 and 2009. In comparison with other G7 countries, the UK exhibited strong growth in produced fixed assets at 4.3%, above the G7 average of 2.9%, over the period 2012 to 2013. However, in 2008 the UK had the largest fall in the value of produced fixed assets for any country over the entire time period. At the end of 2013, the US had the highest growth rate for produced fixed assets at 4.6%.

Figure 5 shows the value of produced fixed assets of the G7 economies per person in pounds sterling. The UK had the highest estimate per person at £119,000 at the end of 2013 whilst Japan had the lowest at £69,000 per person at the end of 2013.

A positive financial net worth means that the values of the financial assets outweigh the value of the liabilities. Figure 6 shows the financial net worth of the G7 economies at the end of 2013 converted to pounds sterling. Japan had the highest financial net worth at £1.9 trillion, while Italy had the lowest at minus £0.4 trillion. At the end of 2013, the UK, Italy and France had negative financial net worth, meaning that their total liabilities are greater than their total assets.