General government financial accounts cover not only the inventory of financial assets and liabilities, but also the transactions of financial assets and liabilities. The difference between the stock of financial assets and the stock of liabilities is called net financial assets.
At the end of the fourth quarter of 2023, the EU's net financial assets were -8,623 billion euros, or -50.8% of gross domestic product (GDP). Compared to the end of the third quarter of 2023, EU net financial assets decreased by EUR 626 billion. Compared to the end of the fourth quarter of 2022, EU net financial assets decreased by €888 billion.
This information comes from data on quarterly government finances released today by Eurostat. This article presents some results from our article on explaining statistics in more detail.
Source dataset: gov_10q_ggfa
Net financial value can change due to trade or other economic flows (primarily changes in prices, also known as holding gains or losses). The main financial instrument liability on the EU General Government's balance sheet is bonds. Because these instruments are traded on financial markets, their value can change and fluctuate over time.
In recent quarters, at EU level, the market value of existing stocks of bonds has tended to decline, particularly due to the rise in interest rates and the associated fall in the value of fixed-income bonds. However, at the end of the fourth quarter of 2023, the market value of EU government collateralized debt increased again, primarily due to revaluations (+584 billion euros), with a negative impact on the net financial value. The continued EU general government deficit (net financial transactions (transactions in financial assets minus transactions in liabilities, -167 billion euros) also had a negative impact on the increase in net financial value. On the other hand, a positive revaluation of equity assets held by EU governments (+146 billion euros) partially offset this in terms of its impact on changes in net financial assets.
