Quarterly sector accounts, UK: January to March 2020

• The households’ saving ratio increased to 8.6% in Quarter 1 (Jan to Mar) 2020, compared with 6.6% in Quarter 4 (Oct to Dec) 2019.

• Households’ consumption spending decreased by £9.5 billion (negative 2.7%) in Quarter 1 2020, the largest quarterly fall in nominal household spending of this type ever recorded; there were large falls in expenditure on motor vehicles, restaurants and hotels, and clothing and footwear.

• The households’ net lending position increased to 2.6% of gross domestic product (GDP) in Quarter 1 2020 from 0.8% in Quarter 4 2019.

• General government saw an increase in its net borrowing position to negative 4.4% of GDP; the increase in borrowing was the largest since Quarter 3 (July to Sept) 2013 and was particularly driven by the introduction of the Coronavirus Job Retention Scheme (CJRS) late in the quarter.

• A fall in private non-financial corporations’ gross operating surplus of £5 billion was seen in Quarter 1 2020 as a fall in profits was seen across almost all industries.

• Financial corporations saw a decrease in their net lending position to 0.5% of GDP in Quarter 1 2020 as they increased their acquisition of non-monetary gold.

• In Quarter 1 2020, domestic sectors and the rest of the world saw large changes in their financial account balance sheets as the UK and world financial markets anticipated the global coronavirus (COVID-19) pandemic.

• In the financial account, there has been evidence of a “Dash for Cash” as UK monetary financial institutions (MFIs) saw record increases in deposits placed with them on the quarter of £819.6 billion as investors switched to safer investments.

• In part, these deposits have been funded by the issuance of new loans by MFIs; they recorded their highest rise ever in short-term loans of £304.8 billion.

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)

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 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.

The households’ saving ratio explained

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 1 (January to March) 2020 and revisions to data from Quarter 1 2019.

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 the 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.

Quality and Methodology Information report

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.