Investment and financing in 2010 (Results of the financial accounts)
The financial assets of households in Germany rose sharply in 2010 as a result of large inflows and rising prices to total €4,933 billion at year-end. Debt increased only marginally. Non-financial corporations’ acquisition of financial assets was also relatively high, while external financing declined.
Households: exceptionally sharp rise in financial assets
Households’ acquisition of financial assets amounted to just under €154 billion overall in 2010. It was thus well above the average of the past few years and reached a level last seen during the “reunification boom”. The main reasons are likely to have been the sharp economic recovery and the surprisingly stable developments on the labour market, which resulted in a perceptible increase in disposable income.
Growth was mainly spread across bank deposits and claims on insurance corporations. Bank deposits (including currency) increased by around €80 billion net. Inflows were therefore larger than a year earlier (+€50 billion), although growth fell well short of the level of 2008 (+€120 billion), in which households restructured in favour of liquid assets given the escalating financial crisis. Specifically, transferable deposits proved relatively attractive, with net inflows of slightly more than €61 billion. By contrast, growth in savings deposits was relatively low at just under €23 billion. Fixed-term deposits (including savings certificates) even experienced net outflows of just over €18 billion. However, the latter affected only short-term fixed-term deposits (with a maturity up to 2 years); long-term fixed-term deposits by contrast experienced net inflows. These developments can probably be attributed in part to the overall low level of interest rates, with interest rates for short-term maturities even declining slightly over the year, thus increasing the relative attractiveness of long-term deposits. In 2010, inflows to claims on insurance corporations (including other claims), which traditionally comprise regular premiums (savings contracts) but increasingly also include one-off payments, were – at €63 billion – roughly as high as a year earlier (€60 billion).
In terms of securities, households exercised restraint on the whole. Looking at all types of securities together, there were neither net inflows nor net outflows in the reporting year (previous year +€27 billion). Specifically, fixed-interest securities in particular saw net sales of just under €14 billion. Mutual funds by contrast attracted inflows, selling shares amounting to a total of €9 billion in net terms. Mixed (securities) funds and equity-based funds proved particularly popular. However, there was much less interest in open-end real estate funds than in 2009. Positive price developments also led to €2 billion worth of net share purchases. In addition, direct purchases of other equity amounted to €3 billion.
Over and above the transaction-related rise, financial assets also increased as a result of large capital gains on securities already held of just under €80 billion. On balance, this led to households holding financial assets amounting to €4,933 billion at the end of 2010.
Household debt increased again marginally in the reporting year for the first time since 2007. On balance, loans (including other liabilities) in the amount of just under €5 billion were taken out. At the end of the year, debt to banks and insurers totalled €1,536 billion. It has therefore been virtually unchanged for more than ten years. As a result, net financial assets rose to €3,397 billion.
Non-financial corporations: strong acquisition of financial assets and weaker external financing
Taking into account intrasectoral ties (known as unconsolidated analysis), non-financial corporations’ acquisition of financial assets was much stronger in the reporting year, at €188 billion, than a year earlier (€151 billion). This can mainly be attributed to strong growth in earnings accompanied by moderate investment, which was still well below its pre-crisis level. There were inflows primarily to fixed-interest securities, where net additions totalled €61 billion, and loans – primarily to other domestic enterprises – of just above €85½ billion net.
Although external financing increased by €95 billion, this was relatively weak compared to previous years – mainly given the forecast earnings and investment developments. Loans from other non-banks (€80 billion), primarily loans from other domestic enterprises, were the main source of financing. Growth in this type of financing therefore remained at the high level achieved throughout since the escalation of the financial crisis at the end of 2008. Trade and supplier credit, at just over €43 billion, also made a significantly greater contribution to corporate financing than its multi-year average. Loans from domestic banks showed a further decline, however, and were on balance reduced by just under €47 billion. By contrast, there was little movement in market-based financing; net issuance of debt securities (including money market paper) and shares was just under €17 billion.