Banque de France Bulletin no. 232: Article 6 France’s national wealth in 2019 Growth underpinned by stock market prices

By Karmous Inès, Desseaux Laure

Thematic: Macroeconomics, microeconomics and structures

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France’s national wealth (or net worth) continued to expand in 2019, reaching EUR 16,421 billion at the end of the year or 8.3 times its net domestic product. The robust rise (+4.8% after +4.4% in 2018) was driven by an increase in the country’s financial net worth, which was in turn linked to the stock market rally (rise of 25% in the SBF 120 after a drop of 12% in 2018).

Household net worth rose by 6.2% to EUR 12,561 billion. The increase was much larger than in the previous year (+2.1% in 2018), and was largely attributable to the rise in the valuation of financial assets.

The same factor also fuelled a sharp rise in non-financial and financial corporations’ own funds, which amounted respectively to EUR 11,042 billion (+13.4%) and EUR 3,270 billion (+6.1%). In contrast, general government net worth increased at a lower rate than in 2018 (+10.3% after +13.3% previously), reaching EUR 328 billion at the end of 2019.

In 2020, the Covid-19 crisis is expected to have had an impact on national economic wealth: net lending by households and net borrowing by non-financial corporations both increased sharply in the first half of the year.

At the end of 2019, France’s national wealth amounted to EUR 16,421 billion, equivalent to 8.3 times its net domestic product (NDP) for the year (see Chart 1 and Box 1). The wealth-to-NDP ratio exceeded the previous highs of 2011 and 2018 (8.1 times NDP for those years). National wealth grew at a slightly higher rate of 4.8% in 2019 compared with 4.4% in 2018 (see Table 1). As in the previous year, the non-financial component was buoyed by consistent growth in the value of land underlying buildings and structures (+6.6% after +6.2% in 2018). In 2019, both financial assets and liabilities rose at a much higher rate than in 2018 (+9.3% and +9.2% respectively, after +0.6% and +0.8% the previous year), fuelled by the rebound in equity prices. France’s financial net worth amounted to EUR 125 billion at end-2019.

In 2020, the Covid-19 crisis is expected to have had an impact on national wealth: in the first half of the year, household net worth was driven upwards by an increase in net lending, while non-financial corporations’ net borrowing also rose (see Box 2).

1 Household wealth was buoyed by the rise in equity prices

At the end of 2019, household net worth totalled EUR 12,561 billion or 8.8 times household net disposable income (see Chart 1). After slowing markedly in 2018, it rose sharply in 2019 (+6.2% after +2.1% previously; see Table 2 below), fuelled by a rebound in financial wealth.

Household non-financial wealth expanded by 4.2% in 2019 (after +4.5% in 2018) to a total of EUR 8,451 billion. Household non-financial assets consist primarily of real estate (buildings and land which account for 92% of total non-financial assets), the value of which grew at a slightly lower rate than in 2018 (+4.0% after +4.5% in 2018), despite the strength of land prices. Household investment in dwellings continued to grow at a modest rate (+3.3% in 2019 and 2018) while prices of buildings and structures slowed (+1.0% after +1.9% in 2018).

Overall, household financial net worth increased by 10.4% after falling by 2.6% in 2018. On the asset side, households continued to favour bank savings products. Growth in currency and deposits accelerated to 5.8% from 4.6% in 2018, buoyed by a rise in overnight deposits and passbook savings. In the persistent low interest rate environment, household debt security holdings continued to fall, albeit at a more moderate rate than in 2018 (–7.0% after –14.4%).