The sector accounts show the relationship between different sectors of the economy and different types of transactions. They summarise the transaction of particular groups of institutions in the economy, showing how income is distributed and redistributed, and how savings are used to add wealth through investment in physical or financial assets.
Publications
Contains statistics on non-bank credit companies' holdings and transactions in both financial and physical assets and liabilities.
Economic commentary on the latest GDP estimate and other ONS economic releases.
M4 private sector holdings of public sector debt Sterling Treasury bills and British government securities and Tax Instruments.
Provides a definitive background to all aspects of data published in Financial Statistics monthly publication.
This article highlights the work being carried out to improve the measurement of deposits and loans held by UK Private Non-Financial Corporations (PNFCs) with overseas banks. It is the first in a series of articles about the continuous improvements that are taking place to further improve the measurement of the UK's National Accounts.
Contains information on the activities of insurance companies, self administered pension funds, investment trusts, unit trusts and property unit trusts. The First Release brings together information on the investments made by institutions whose primary business is the investment of funds in the financial markets. It draws on data compiled from a series of quarterly and annual surveys.
This release contains quarterly net investment data arising from financial transactions (investments) made by insurance companies, self-administered pension funds, investment trusts, unit trusts and property unit trusts. Also included are quarterly balance sheet data for short-term assets and liabilities, along with income and expenditure data for insurance companies and self-administered pension funds. All data are reported on a current price basis. In addition, every third quarter release contains annual balance sheet data for all the institutional groups; providing information on the market value of assets and liabilities. Annual income and expenditure data for insurance companies are also reported at this time.
National Accounts Sector Classification describes the classification of organisations and institutions in the National Accounts, as well as information on flows and transactions through the accounts, informed by decisions of the National Accounts Classification Committee (NACC) Regular publications include the Sector Classification Guide (SCG) monthly updates detailing new or recent changes in classifications, as well as classification articles, explaining particular classification decisions.
Data on capital employed by Private Non-Financial Corporations (PNFCs). Contains annual, net and gross rates of return (expressed as percentages) on capital used by PNFCs.
Release compiling the latest statistics on the household economic situation, inlcuding key National Accounts aggregates.
Contains quarterly assets, liabilities and selected net investment data arising from financial transactions made by businesses engaged in finance leasing, factoring and credit granting.
Business stock information by industry, sizeband, ownership and Local Authorities.
The latest Share Ownership report gives details of beneficial ownership of UK listed companies as at 31 December. This is provided in terms of National Accounts classifications.
Release compiling the latest statistics on the household economic situation, including key National Accounts aggregates.
Analysis of household disposable income and the saving ratio.
Provides detailed estimates of national product, income and expenditure, UK sector accounts and UK balance of payments.
Overview
The framework of national accounts has five kinds of accounts:
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goods and services
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production
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distribution and use of income
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capital
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financial
The framework of the accounts
The production account records activity of producing goods and services. The distribution and use of income accounts record how incomes are generated by production, distributed to institutional units with claims on the value added created by production, redistributed among institutional units and eventually used by households, government units or non-profit institutions serving households (NPISH) for purposes of final consumption or saving.
The capital account records the flows of non-financial assets acquired and disposed. The financial account shows how the net lending or borrowing on the capital account is financed by transactions in financial instruments.
The distribution and use of income accounts can be elaborated to form a consistent set of sector accounts. This is done in two dimensions, by institutional sectors and by types of transactions. A third dimension related to capital and financial transactions is that of asset and liability levels which are otherwise known as national and sector balance sheets.
Institutional Sectors
There are two types of units: consuming units (mostly households) and production units (mainly corporations, NPISH and government). Units can own goods and services, incur liabilities and engage in economic activity and transactions with other units in their own right. Individual units are aggregated to form sectors of the economy which are listed as follows (Note: the Rest of the World is treated as a sector in respect of the dealings with the UK):
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non-financial corporations (public corporations and private non-financial corporations)
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financial corporations
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general government
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households
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Rest of the World
Transactions
These are divided into three types; transactions in products which are related to goods and services; distributive transactions which transfer wealth between units of the economy; and financial transactions which are financial claims by one unit on another.
Sector accounts published quarterly in the UK Economic Accounts. Annual data are published in UK National Accounts – The Blue Book.
Technical Data
Sequence of accounts - BB
Transactions can be grouped broadly according to purpose in the production, distribution and use of income, capital or financial account.
Production account
This displays the transactions involved in the generation of income by the production of goods and services. This is produced for the UK total economy, excluding Rest of the World. For each of the four sectors the balancing item gross value added (GVA) is shown as output less intermediate consumption.
GVA at basic prices differs from gross domestic product (GDP) for the UK total economy because taxes less subsidies on products are not taken into the account but instead included within total resources for the UK economy. The sum of GVA and taxes less subsidies on products for the UK economy is GDP at market prices.
Distribution and use of income account
To obtain the disposable income and savings of each sector, transfers in and out need to be accounted for. This account is subdivided into four component accounts which describe the distribution and the redistribution of income and its use in the form of final consumption.
1. The generation of income account: this shows the sectors and industries that are the source of income. It also shows the derivation of the operating surplus/profit arising from the production account, before distributions such as interest, rent and income tax.
2. The allocation of primary income account: this shows the resident units and sectors as recipients of primary income and demonstrates the extent to which operating surpluses are distributed (for example, dividends) to owners of enterprises. Also recorded is the property income received by an owner of a financial asset in return for providing funds to another unit. The resource side of this account includes components of the income measure of gross domestic product (GDP) and is the staring point of quarterly sector accounts. The balance of this account is the gross balance of primary income (B.5g) for each sector, which when aggregated for all sectors across of UK economy derives gross national income.
3. Secondary distribution of income account: this describes how the balance of primary income for each sector is allocated by redistribution through transfers like taxes on income, social contributions/benefits and other current transfers. It excludes social transfers in kind. The balancing item of this account is gross disposable income (B.6g) which reflects current transactions and explicitly excludes capital transfers, real holding gains/losses and the consequences of events like natural disasters.
4. Use of disposable income account: this illustrates how disposable income is split between final consumption expenditure and saving. Only the government and the households and NPISH sectors have final consumption. In addition for households and pension funds there is an adjustment item in the account that reflects the way transactions between households pension funds are recorded. This adjustment (D.8) is known as 'Adjustment for the changes in the net equity of households in pension funds reserves.'
Capital account
This is presented in two parts:
1. Saving (B.8g): This shows how the balance between national disposable income, and final consumption expenditure from the production and distribution and use of income accounts, is reduced or increased by the balance of capital transfers (D.9), to provide an amount available for financing investment.
2. Total investment in non-financial assets: This is the sum of gross fixed capital formation (P.51), changes in inventories (P.52), acquisitions less disposals of valuables (P.53) and acquisitions less disposals of non-financial non-produced assets (K.2). The balance on the capital account is known as net lending (positive balance) or borrowing (negative balance).
Financial account
This elaborates the acquisition and disposal of financial assets and liabilities. Examples of financial assets include bank deposits, treasury bills, bonds and shares. The balance of all transactions in the financial account is net lending or borrowing.
Data sources
Data feeding into sector accounts are derived from several sources. The production and capital accounts are generated from gross domestic product (GDP), split by sector. For the financial account, data come from both external and internal sources. External sources include Bank of England, Bank of International Securities, London Stock Exchange and other government departments. Internal sources include Office for National Statistics (ONS) surveys for insurance and pensions, foreign direct investment and share ownership.
Glossary
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Assets
Entities over which ownership rights are enforced by institutional units, individually or collectively, and from which economic benefits may be derived by their owners by holding them over a period of time.
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Balance sheet
A statement, drawn up at a particular point in time, of the value of assets owned and of the financial claims (liabilities) against the owner of these assets.
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Capital
Capital assets are those which contribute to the productive process so as to produce an economic return. In other contexts, the word can be taken to include tangible assets (for example, buildings, plant and machinery) intangible assets and financial capital (see also fixed assets, inventories).
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Distributive transactions
Transfer income or wealth between units of the economy, and include property income, taxes and subsidies, social contributions and benefits, and other current or capital transfers.
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Financial corporations
All bodies recognised as independent legal entities whose principal activity is financial intermediation and/or the production of auxiliary financial services. However, the UK currently treats financial auxiliaries as non-financial corporations.
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Financial transactions
These differ from distributive transactions in that they relate to transactions in financial claims by one unit on another, whereas distributive transactions are unrequited. The main categories in the classification of financial instruments are monetary gold and special drawing rights, currency and deposits, securities other than shares, loans, shares and other equity, insurance and pension funds reserves and other accounts receivable/payable.
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Gross domestic product (GDP)
The total value of output in the economic territory. It is the balancing item on the production account for the whole economy. Domestic product can be measured gross or net. It is presented in the accounts at market (or Purchasers’) prices.
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Gross fixed capital formation
Acquisition less disposals of fixed assets and the improvement of land.
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Gross value added (GVA)
The value generated by any unit engaged in production, and the contributions of individual sectors or industries to gross domestic product. It is measured at basic prices, excluding taxes less subsidies on products.
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HMT
Her Majesty’s Treasury is the UK’s economics and finance ministry.
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Holding gain/loss
Profit or loss obtained by virtue of the changing price of assets being held. Holding gains or losses may arise from either physical or financial assets.
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Households
Individuals or small groups of individuals as consumers and in some cases as entrepreneurs producing goods and market services (where such activities cannot be hived off and treated as those of a quasi corporation).
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Institutional units
Institutional units are the individual bodies whose data are amalgamated to form the sectors of the economy. A body is regarded as an institutional unit if it has decision-making autonomy in respect of its principal function and either keeps a complete set of accounts or is in a position to compile, if required, a complete set of accounts which would be meaningful from both an economic and a legal viewpoint.
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Intermediate consumption
The consumption of goods and services in the production process. It may be contrasted with final consumption and capital formation.
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Inventories
Inventories (known as stocks in the former system) consist of finished goods (held by the producer prior to sale, further processing or other use) and products (materials and fuel) acquired from other producers to be used for intermediate consumption or resold without further processing.
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Liability
A claim on an institutional unit by another body which gives rise to a payment or other transaction transferring assets to the other body. Conditional liabilities, where the transfer of assets only takes place under certain defined circumstances, are known as contingent liabilities.
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Net
After deduction of the consumption of fixed capital. Also used in the context of financial accounts and balance sheets to denote, for example, assets less liabilities.
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Operating surplus/profit
The balance on the generation of income account. Households also have a mixed income balance. It may be seen as the surplus arising from the production of goods and services before taking into account, flows of property income.
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Property income
Incomes that accrue from lending or renting financial or tangible non-produced assets, including land, to other units (see also Tangible assets).
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Resources and uses
The term ‘resources’ refers to the side of the current accounts where transactions which add to the amount of economic value of a unit or sector appear. For example, wages and salaries are a resource for the unit or sector receiving them. Resources are by convention put on the right side, or at the top of tables arranged vertically. The left side (or bottom section) of accounts, which relates to transactions that reduce the amount of economic value of a unit or sector, is termed uses. To continue the example, wages and salaries are a use for the unit or sector that must pay them.
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Rest of the World
This sector records the counterpart of transactions of the whole economy with non-residents.
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Saving
The balance on the use of income account. It is that part of disposable income that is not spent on final consumption, and may be positive or negative.
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Tangible assets
These comprise produced fixed assets and non-produced assets. Tangible fixed assets, acquisition and disposal of which are recorded gross fixed capital formation (P.51), comprise buildings and other structures (including historic monuments), vehicles, other machinery and equipment and cultivated assets in the form of livestock and trees yielding repeat products (dairy cattle, orchards). Tangible non-produced assets are assets such as land and sub-soil resources that occur in nature over which ownership rights have been established. Similar assets to which ownership rights have not been established are excluded as they do not qualify as economic assets.
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Transactions in products
Related to goods and services, and include output, intermediate and final consumption, gross capital formation and exports and imports.
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Valuables
Goods of considerable value that are not used primarily for production or consumption but are held as stores of value over time. They include precious metals, precious stones, jewellery and works of art. As a new category in the accounts, the estimates for them are currently fairly rudimentary, though transactions are likely to have been recorded elsewhere in the accounts.
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Value Added
The balance on the production account: output less intermediate consumption. Value added may be measured net or gross.
Contact Details
For statistical enquiries about this topic, please contact:
Phillip Davies
Email: gdp@ons.gsi.gov.uk
Telephone: +44 (0) 1633 456492
Office for National Statistics Government Buildings, Cardiff Road Newport NP10 8XG
