Item 24b: European Sector Accounts ESTP course on National Accounts ESA 2010 Luxembourg, 15 May - 19 May 2017 Eurostat

Content Purpose of the Sector Accounts Overview of compilation of the European Sector Accounts Data dissemination and data sharing with the international organisations Future prospects

1. Purpose of the Sector Accounts To analyse the behaviour of economic agents, in particular how their income is: earned, spent, saved Transactions (non-financial) Goods and Services Distributive transactions Following the sequence of accounts

1. Purpose of the Sector Accounts The matrix lay-out Example: the sector accounts of EA19, 2013Q1

1. Purpose of the Sector Accounts Key indicators Households Saving rate: Gross Saving/(GDI + D8net) Investment rate: GFCF/(GDI + D8net) Real Income and Consumption per capita Non-financial corporations Investment rate: GFCF/GVA Profit share: GOS/GVA

2. Compilation of the European Sector Accounts from national to European accounts Data transmission to Eurostat: Annual financial and non-financial Sector Accounts – countries are obliged (according to ESA 2010 TP) to submit full set of sector accounts by t+9 months with minimum time-span from 1995 onwards Quarterly non-financial Sector Accounts – countries are obliged (according to ESA 2010 TP) to submit set of sector accounts by t+85 (EA countries) and t+3m (EA finalized & non-EA countries), with minimum time-span from 1999Q1 onwards Confidentiality of data is determined by the use of flags. Data sent by the countries as free for publication are shared with other international organisations (ECB, OECD, ECFIN)  

2. Compilation of the European Sector Accounts

2. Compilation of the European Sector Accounts from national to European accounts The compilation of European aggregates (ESA 2010, Chapter 19) Conversion to euros Estimation of missing (small) countries and missing series Re-balancing countries data (if needed) Incorporation of the European institutions Consolidation of intra-EA / intra-EU flows Re-balancing of the accounts Seasonal adjustment of selected series (for key indicators)  

2. Compilation of the European Sector Accounts from national to European accounts From a practical point of view, the compilation is divided in four steps: Extrapolation: summing-up countries Adjustment: replacing selected transactions with data coming from other sources Balancing: making the overall picture consistent Validation: checking the results

2. Compilation of the European Sector Accounts from national to European accounts Extrapolation EA/EU = Σcountries Estimation of missing countries Estimation of missing transactions (not sent by countries because of derogations, non-compliances or voluntary transmissions)

2. Compilation of the European Sector Accounts from national to European accounts Extrapolation Estimation of missing series: Done on countries' data, ad hoc solution (using ASA data if available) Estimation of missing (small) countries: EA  ECB (Z11 file) EU  ESTAT Re-balancing countries data (if needed): VAL.V  Original MS data are balanced VAL.VM  Original MS data are not balanced. Manual re-balancing of the data by ESTAT Automatic Conversion to euros

2. Compilation of the European Sector Accounts from national to European accounts Adjustment Data are replaced by other sources Estimation intra-RoW (ECB, BoP) Estimation of D.43 (ECB) Trade statistics (Trade Statistics) GFS data (GFS) EUI data (ECB, BoP)

2. Compilation of the European Sector Accounts from national to European accounts The Rest of the World sector The European RoW should gather flows between European residents and third countries => European RoW ≠ Σ National RoWs « Intra-flows » between European residents are: (1) estimated using the BoP geographical breakdown (2) removed from the sum of national RoWs

2. Compilation of the European Sector Accounts from national to European accounts Before consolidation After consolidation

2. Compilation of the European Sector Accounts from national to European accounts The RoW, example: Compensation of employees paid to the RoW D1 / S2 / uses = 26.5 billion € BoP310 / credits / Intra-EU = 14.1 billion € BoP310 / credits / Extra-EU = 11.3 billion € But 14.1 + 11.3 = 25.4 ≠ 26.5 Discrepancies are distributed proportionally: => EU/D1/S2-Intra/uses = 14.7 billion € => EU/D1/S2-Extra/uses = 11.8 billion €

2. Compilation of the European Sector Accounts from national to European accounts Asymmetries Definition: Intra_resources – Intra_uses Example: EU/D1/S1+S2-Intra/uses = 14,7 billion € EU/D1/S1+S2-Intra/resources = 18,1 billion € Asymmetries for D1 = 3,4 billion € European sector accounts do not balance Asymmetries must be allocated to sectors to re-balance the accounts => European accounts ≠ Σ national accounts (even for domestic sectors)

2. Compilation of the European Sector Accounts from national to European accounts Estimation of D43, intra flows: EA  ECB EU  ESTAT Trade statistics, used to absorb asymmetries: P2_S11: intermediate goods and services (business travel mainly) P51G_S11: capital goods P2_S12 and P2_S1M: intermediate goods P31_S1M: consumption goods and services (private travel mainly)

2. Compilation of the European Sector Accounts from national to European accounts GFS data: When available, the data published by GFS replace completely the data of S13 sector at aggregated level Missing data: before 2002; coverage is not exactly the same Challenging timeliness

2. Compilation of the European Sector Accounts from national to European accounts EU Institutions ECB resident of the euro area and EU (sector S12, ECB) ESM resident of the euro area and EU (sector S12, ECB) EIB resident of the EU (sector S12, BoP) but not of the euro area European institutions whose accounts are recorded in the General Budget are resident of the EU but not euro area (sector S13, BoP)

2. Compilation of the European Sector Accounts from national to European accounts Balancing Data are adjusted in order to be internally consistent Only sectors S.11, S.12 and S.1M are impacted S.1 is obtained as sum of sectors

2. Compilation of the European Sector Accounts from national to European accounts Balancing Proportional, including only S11, S12 and S1M sectors Ad hoc, a weak transaction is left as a residual Impact may be large (it definitely increased with the introduction of ESA2010) Room for improvements?

2. Compilation of the European Sector Accounts from national to European accounts Validating Final results are checked Results are internally consistent Causes of revisions, major events, etc. (specific country? Other sources?) Ready for seasonal adjustment!

2. Compilation of the European Sector Accounts from national to European accounts Validation EA/EU aggregates are validated as other countries As many sources are involved, it is time consuming understanding where the main revisions/events are coming from (countries, BoP, GFS, etc.) Once validated, selected transactions are seasonally adjusted using JDemetra+ 2.1

3. Data dissemination Annual non-financial Sector Accounts EA/EU key indicators released before t+4 months. Key indicators includes: Households: saving rate, investment rate and debt-to-income ratio, net financial asset ratio, real income and real consumption per capita Businesses: profit share, investment rate, debt-to-income ratio, return on capital employed, return on equity Quarterly non-financial Sector Accounts EA/EU data: releases at around t+102 days (preliminary, it will be t+94 as from July 2017), including news releases (seasonally adjusted), on: Households: saving rate and investment rate Businesses: profit share and investment rate release at around t+119 days (final), including (seasonally adjusted): Households: real income and real consumption per capita ECB publishes Quarterly Financial Sector Accounts for EA at around t+119 days

Households saving rate

Business profit share 26

Blue layout

4. Future prospects In cooperation with Member States: Improve the timeliness  Flash estimates published at around t+94 days as from July 2017 In cooperation with Member States, OECD and ECB: Give more attention to the household perspective, and in particular on the distributional aspects (t+119 press release / Stiglitz-Fitoussi-Sen report)

Thanks for your attention!! For more information, please visit our dedicated Eurostat's website on the Sector Accounts at: http://ec.europa.eu/eurostat/web/sector-accounts ESTAT-SECTOR-QUERY@ec.europa.eu