Current Account Deficit Cut By £1.6bn

The seasonally adjusted current account deficit for Q4 2009 was £1.7bn equivalent to -0.5% GDP, compared with Q3 revised £5.9bn (-1.7%). The deficit on trade in goods and services was -£8.6bn or -2.5% of GDP, and -2.2% in previous quarter. The surplus on income is 2.9% of GDP compared with 1.5% in Q3.

In Q4 there was a deficit of £8.2bn with EU compared with £3.9bn Q3. The decrease in deficit was mainly due to higher surpluses on income and trade in services with a lower deficit on current transfers partly offset by an increase in deficit on trade in goods. The current account with non-EU countries shows a surplus of £6.5bn compared with £2.1bn in the previous quarter. The change is due to a surplus on income increase of £5bn to £10.3bn, the surplus on trade in services increased by £0.3bn to £12.4bn and the deficit on current transfers decreased by £0.2bn to £3.3bn due to a fall in debits from UK payments to EU institutions, though these statistics can be erratic. The annual deficit on current transfers was £14.6bn in 2009 an increase of £0.6bn. The deficit on trade in goods increased by £1.2bn to £21bn.

The capital account recorded a surplus of £1bn in Q4, up £0.1bn on Q3. The surplus on the capital account rose from £3.2bn in 2008 to £3.6bn in 2009. The financial account showed a net inflow of £6.1bn in Q4 compared with a net outflow of £1.4bn in Q3. There was a net disinvestment abroad of £15.3bn and a net disinvestment in the UK of £9.6bn after £16.7bn in Q3 2009. Direct investment abroad fell to £2.8bn from £4.9bn and direct investment in the UK increased by £15.1bn to £21.1bn due mainly to higher investment in equity capital. Portfolio investment abroad amounted to a net investment of £22.9bn in Q4 after £53.6bn in Q3. Total portfolio investment in the UK amounted to a net investment of £14.5bn in Q4 2009 following a net investment of £32.2bn in Q3. Financial derivatives had net settlements of £5.3bn. The capital balance was £973bn.

In 2009 current account in deficit by £18.4bn compared with £22bn in 2008. The deficit amounts to -1.3% of GDP compared with -1.5% in 2008. The deficit of trade in goods and services for 2009 is -2.3% GDP compared with -2.6% in 2008. In 2009 the UK recorded a deficit of £19.5bn with the EU, compared with £5.6bn in 2008 and there was a surplus of £1.1bn with non-EU countries after a deficit of £16.4bn in 2008.

Direct investment abroad in 2009 amounted to £11.9bn compared to £87.6bn in 2008. Direct investment in the UK in 2009 amounted to £29.3bn compared with £49.8bn in 2008. Portfolio investment abroad in 2009 was £154.4bn following a net disinvestment of £123.5bn in 2008. Investment in the UK increased to £188.3bn in 2009 from £185.8bn in 2008. Financial derivatives in 2009 reported net settlements of £14.5bn compared with £35.5bn in 2008.

Non-seasonally adjusted figures for Q4 2009 show a current balance of -£1.8bn, a capital balance of £972bn, net financial transactions of £6.15bn and net errors and omissions of -£5.32bn to balance the three accounts.