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Chapter 13: Flow of Funds This product is designated as National Statistics

Released: 30 October 2015 Download PDF

Flow of Funds

The tables in this chapter present estimates of stocks and flows of financial assets and liabilities by institutional sector and financial instrument, further detail of the tables are given below:

Estimates for all the institutional sectors are brought together in this chapter, to allow changes in assets and liabilities to be compared across the sectors. Estimates for each individual sector are also published in the appropriate sector chapter in this publication.

These financial statistics are important for identifying the build-up of risks in the financial sector and for understanding financial connections among the institutional sectors and sub-sectors within the economy.

What is flow of funds?

“Flow of funds” are the financial flows across sectors of the UK economy and the rest of the world. Information can be presented on debtor and creditor relationships and, and the changes in financial assets and liabilities in the economy. Flow of funds is based on the principle that the movement of all funds must be accounted for. Across the total economy (UK and the rest of the world), the total sources of funds must equal the total uses of funds and every financial asset transaction must have a counterpart liability transaction.

Since the recent global financial crisis, the international community has had an increased focus on the analysis of financial stability, and the development of improvements to the data which support that analysis. This is particularly important for those countries, like the UK, which have a significant financial sector. An important area identified internationally for improvement is the development of flow of funds counterpart statistics. These improve our understanding of how each individual sector may be exposed to the risk which may build up in other sectors. These statistics support macro-economic analysis and financial stability policy.

Counterpart statistics are not, at present, presented in this chapter. However, in response to the need for counterpart statistics, ONS and the Bank of England started the joint Flow of Funds Project in 2014. More information on the project and experimental counterpart statistics can be found on our Flow of Funds web pages.

Background notes

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  3. This release includes data available up to 2014. Data are consistent with Index of Production, published on 07 October 2015, the current price trade in goods data within UK Trade, published on 09 October 2015 and Balance of Payments, Quarterly National Accounts and United Kingdom Economic Accounts, published on 30 September 2015.

  4. In line with the National Statistics Quality Review (NSQR): Review of National Accounts and Balance of Payments, we have published a response to National Statistics Quality Review (NSQR) Series (2) Report No. 2: Review of National Accounts and Balance of Payments on our website.

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  7. The UK Statistics Authority published 2 new assessment reports on the Annual and Quarterly National Accounts and Supply and Use Tables and Input-Output Tables on 25 February 2015. These are available on the UK Statistics Authority website.

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  13. Common misinterpretations of this series:

    • expectations of accuracy and reliability in early estimates are often too high

    • revisions are an inevitable consequence of the trade-off between timeliness and accuracy

    • early estimates are based on incomplete data

    Very few statistical revisions arise as a result of “errors” in the popular sense of the word. All estimates, by definition, are subject to statistical “error”. In this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable “errors”, such as human or system failures, and such mistakes are made clear when they do occur.

  14. Estimates for the most recent quarters are provisional and are subject to revision in the light of updated source information.

  15. Our revisions to economic statistics brings together our work on revisions analysis, linking to articles, revisions policies and documentation from the Statistics Commission's report on revisions.

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