Balance of payments estimates for the second quarter of 2009 were released last week by the ONS. The current account showed a deficit of £11.4bn up from £4.1bn in Q1. These figures equate to -3.3% of GDP. The increase in the deficit was due partly to a decline in the income surplus by £5.6bn to £1.4bn, surplus on trade in services decreasing to £11.3bn and an increase in current transfers of £0.5bn to £4.2bn.
The trade in goods deficit was £19.9bn, the trade in services surplus was £11.3bn. Income surplus was at £1.4bn, UK earnings on investment abroad fell by £9.1bn to £38.1bn, foreign earnings on investment fell by £3.7bn to £36.5bn. Direct investment income surplus was £7bn, down £7.1bn. Earnings on direct investment abroad were £12.7bn partly due to losses of UK monetary financial institutions losses. Earning on direct investment in UK were up by £4bn to £5.7bn mainly due to foreign banks reporting smaller losses than in the last quarter. A portfolio investment income balance of near zero was recorded. There had been a deficit of £1.9bn. UK earnings on portfolio investment abroad fell to £15bn and foreign earnings on portfolio investment fell to £15bn. The increase in current transfers deficit was mainly due to a rise in debits from UK payments to EU institutions which, it has to be said, can be erratic.
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