First Quarter Balance Of Payments £15.5bn Deficit

The UK current account deficit increased to £14.5bn in the first quarter of 2013 from £13.6bn in Q4 2012 according to a statistical bulletin from the ONS. The Q1 deficit equals 3.6% of GDP. The trade deficit improved to £6.1bn in Q1 2013 from £8.3bn in Q4 2012.

The monthly analysis shows that income balance fell to -£2.1bn from a surplus of £1bn which had the effect of increasing net borrowing from £12.7bn to £13.9bn. A decrease in the deficits of trade in goods and services of £2.1bn and in current transfers of £0.2bn partially offset the increase.

The UK was a net borrower of £55.4bn in 2012 from £18.5bn in 2011 mainly due to the income surplus of £22.5bn in 2011 becoming a deficit of £2.3bn in 2012 mainly due to a decrease in direct investment income surplus.

Trade in goods was -£26.5bn from -£28bn in the previous quarter. Exports rose by £0.9bn while imports fell by £0.5bn. Trade in services was £20.4bn in surplus up £0.7bn on the previous quarter. Exports increased to £49.4bn while imports increased by £0.3bn to £29bn.

Transfers were £6.2bn in deficit in Q1 2013, a decrease of £0.2bn.

The capital account was £0.6bn in surplus in Q1 2013 down £0.3bnn from the previous quarter. Inward investment was £10.2bn. The UK currnet account deficit £59.2bn.

Current Account Deficit Reduced To £2bn

The ONS recently published the latest balance of payments data for the UK. The current account deficit in Q2 2011 was £2bn down from £4.1bn in Q1. The total trade deficit increased from £5.8bn in Q1 to £6.8bn in Q2 2011. The UK recorded net international investment liabilities of £115bn.

The capital account showed a surplus of £1bn, up £0.3bn from Q1. The current transfers deficit decreased to £4.8bn, a fall of £0.9bn, due mainly to lower payments by the government. Payments to EU contributions can be erratic.

The trade in goods deficit increased to £24.6bn in Q2 2011 from £22.8bn in Q1. Exports fell by £1.2bn while imports increased by £0.6bn to a record £98.4bn. Trade in services also saw a new record in Q2. The surplus on trade in services grew to £17.8bn. Exports grew by £1.5bn to another record £46.1bn.

There was a net outflow of £9bn compared with a net outflow of £3.5bn in the previous quarter. Overseas investment fell to £42.7bn from £160.1bn and investment flowing into the UK in Q2 was £33.8bn down from £156.6bn in Q1.

Fall In Balance Of Payments Deficit

The current account reported a deficit of £9.4bn for the first quarter of 2011 equivalent to -2.5% of GDP. The deficit for Q4 2010 was £13bn. There was a deficit of £15bn with the EU compared with £16.9bn in Q4 2010. Trade in goods was -£22.2, trade in services showed a surplus of £13.8bn. Income fell from £7.4bn in Q4 2010 to £4.6bn in Q1 2011. The capital account balance was £0.6bn.

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.

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.