National accounts, 2006 - Further rise in private sector debt but drop in government debt

Denis Marionnet, Banque de France

The growth in private sector debt increased in 2006: outstanding household credit continued to rise at a steady rate, bringing the rate of indebtedness to a new historical high, whilst non-financial corporations deepened their reliance on bank loans and issuing negotiable bonds. On the other hand, public sector net borrowing decreased, as well as gross financial debt, which went down for the first time since 1999. Under the effect of the short-term interest-rate rise, accumulation of deposits in current accounts reduced profit from instant access savings accounts and fixed-term investments. In addition, housing savings plans («Plans d'Épargne Logement») experienced massive withdrawals following changes to their tax status. Households mainly reinvested these funds in life-insurance policies and mutual investments («OPCVM»s). As a consequence of their attracting greater levels of funds, insurance companies and mutual investment companies increased their acquisitions of securities, and, in particular, bonds.

Insee Première
No 1137
Paru le : 22/05/2007