The incomes and financing balance of individuals and companies

A. Bruggeman
Additional contact information
A. Bruggeman: National Bank of Belgium, Research Department

Economic Review, 2008, issue iii, 75-91

Abstract: The article begins by establishing that the share of wages in GDP has declined quite sharply in Belgium over the past five years. The fall in the wage share in 2003-2005 was due partly to the deteriorating economic conditions at the beginning of this century. It can also be seen as a continuation of the decline which started in the early 1980s, attributable to structural developments such as globalisation, technological progress and the growing importance of the services sector. However, the downward trend in the total disposable income of individuals as a percentage of GDP is due mainly to the reduction in their net interest income, which is in turn attributable to falling interest rates. In absolute terms, however, the disposable income of individuals has risen, even if inflation is taken into account. The main effect of the reduction in the gross disposable income of individuals in relation to GDP has been to cut the savings ratio, as consumption expenditure has only fallen slightly as a percentage of GDP. Moreover, since 2004 individuals’ investment spending has surged, reducing their financing balance to less than 1 p.c. of GDP. The primary counterpart of the recent contraction of the wage share has been the strong rise in the gross operating surplus of companies. On the other hand, companies have also paid more taxes on income and wealth, made higher net dividend payments to other sectors, and invested more in fixed assets. Nonetheless, the financing balance of companies has risen steadily, reaching an average of 2.4 p.c. of GDP in the past three years, so that they have been able to move gradually towards financing more of their investment out of internal resources, thus further consolidating their balance sheets.

Keywords: wage share; operating surplus; disposable income; financing balance (search for similar items in EconPapers)
JEL-codes: E24 E25 J3 (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.nbb.be/en/articles/incomes-and-financi ... uals-and-companies-0 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbb:ecrart:y:2008:m:september:i:iii:p:75-91

Access Statistics for this article

More articles in Economic Review from National Bank of Belgium Contact information at EDIRC.
Bibliographic data for series maintained by ().