A Narrowing In The Balance Of Payments

The ONS bulletin on the balance of payments showed a net current account deficit of £8.5bn from £8.8bn in the previous quarter. The income surplus increased by £3.4bn to £3.5bn, the deficit on trade in goods fell by £1.5bn to £20.8bn and the deficit on trade on current transfers increased by £1bn to £3.8bn. These were partly offset by the surplus on trade in services which fell £3.7bn to £12.6bn. The current account balance showed a £25.1bn deficit, or -1.7% of GDP in 2008 compared to -2.5% now. The deficit on trade in goods narrowed from £22.3bn to £20.8bn by £0.2bn in oil, fuels other than oil by £0.2bn and finished manufactured goods by £1bn. The surplus on trade in services was £12.6bn. It reflects a decrease in financial and insurance services. Direct investment income was up £3.7bn to £9.8bn, but portfolio investment showed a deficit of £1.4bn. The capital account was almost unchanged with a surplus of £0.8bn in Q1 2009. Net direct investment abroad was £32.4bn and in the UK £34.2bn. Net portfolio investment abroad was £38.3bn and in the UK £122.2bn, the highest on record. Debt securities accounted for £96.9bn in the first quarter.