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Apr 23, 2012

Sectoral Balance Sheets Euro Zone

This chart from the OECD shows per sector the net lending/borrowing for the Euro Zone. As you can see the household and the financial sectors are net lending sectors and the non-financial corporations and governments are net borrowing sectors. This means for example for the households that they save more than they borrow for a sector as a whole. This doesn't mean that the borrowing of the households doesn't increase on the other hand.

The total economy shows the net lending/borrwing of the total Euro Zone economy. In  other words when the Euro Zone as a total economy is borrowing, it borrows from the rest of the world, which was the case before the crisis.

Before the crisis households en companies increased their borrowing notably. Since the crisis households and companies started do pay off their debt. Although as you were able to see in other posts this is a long process. The lower demand by the households and the companies was accommodated by an increase in government spending (higher borrowing).


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