The underlying UK current account deficit excluding non-monetary gold and other precious metals narrowed to £15.6 billion, or 2.9% of gross domestic product (GDP) in Quarter 3 (July to Sept) 2020; the UK current account deficit including non-monetary gold and other precious metals widened to £15.7 billion in Quarter 3 2020, or 2.9% of GDP.
In Quarter 3 2020, the total trade surplus narrowed as imports of goods partially recovered following their sharp contraction in Quarter 2 (Apr to June) 2020 when global trade stalled because of the global coronavirus (COVID-19) pandemic; trade in services exports and imports continue to be impacted by the downturn, specifically in transport and travel services.
The primary income deficit narrowed by £7.6 billion to £11.9 billion, or 2.2% of GDP, in Quarter 3 2020; this was because of a larger recovery in UK earnings on foreign investments than the recovery in payments to foreign investors on their UK investments following the large decline in earnings recorded in Quarter 2 2020.
Financial flows stabilised in Quarter 3 2020 with a net inflow to the UK of £33.1 billion, as non-residents increased their UK investments by £49.3 billion while UK residents increased their foreign assets by £16.2 billion.
The UK’s net international investment position (IIP) improved slightly by the end of Quarter 3 2020 to a net liability position of £520.7 billion as UK residents benefitted from a global stock market recovery as investments increased in value.
Changes to this bulletin
We have temporarily changed the format for the Balance of payments statistical bulletin. Due to the additional challenges faced collecting and publishing data, we have reduced the normal commentary found in this Balance of Payments release. All data sets are published as usual.Nôl i'r tabl cynnwys
Balance of payments
Dataset | Released 22 December 2020
Quarterly summary of balance of payments accounts including the current account, capital transfers, transactions, and levels of UK external assets and liabilities.
Balance of payments time series
Dataset | Released 22 December 2020
Quarterly summary of balance of payments accounts including the current account, capital transfers, transactions and levels of UK external assets and liabilities.
Balance of payments – revision triangles
Dataset | Released 22 December 2020
Quarterly summary information on the size and direction of the revisions made to the data covering a five-year period, UK.
Balance of payments statistics are compiled from a variety of sources, produced in the national accounts Sector and Financial Accounts (SFA) framework. Some of the main sources used in the compilation include:
- Overseas Trade Statistics (HM Revenue and Customs (HMRC))
- International Trade in Services Survey (Office for National Statistics (ONS))
- International Passenger Survey (ONS) – this was suspended from 16 March 2020
- Foreign Direct Investment Survey (ONS and Bank of England (BoE))
- Various financial inquiries (ONS and BoE)
- Ownership of UK Quoted Shares Survey (ONS)
Trade is measured through both exports and imports of goods and services. Data are supplied by over 30 sources including several administrative sources, HMRC being the largest for trade in goods. The International Trade in Services Survey (ITIS), conducted by the ONS, is the largest single data source for trade in services.
The main source of information for UK foreign direct investment (FDI) statistics is the Annual FDI Survey; separate surveys are used to collect data on inward and outward FDI. This is combined with data from the BoE for all monetary financial institutions – such as banks – and other sources for property and public corporations in FDI. The statistics in this bulletin are compiled using the asset and liability measurement principle, which uses residency as the main distinction between outward and inward investments. It measures the direct investments of UK-resident companies – both UK parent companies and foreign-owned UK affiliates – with the rest of the world relative to the direct investments of non-UK resident companies held in the UK.
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Impact of coronavirus (COVID-19) on data quality
Since the start of the coronavirus (COVID-19) pandemic and various lockdown restrictions we have faced numerous challenges in producing the UK balance of payments estimates, including lower than usual response to surveys that feed into the estimates.
Given the uncertainties in estimating the impact of the pandemic on the accounts, users should be aware of potentially larger revisions than usual. UK balance of payments data and international investment position (IIP) estimates since Quarter 1 (Jan to Mar) 2020 are therefore subject to more uncertainty than usual because of these data collection challenges. More information on the challenges faced is available in Coronavirus and the effects on the UK Balance of Payments.
Current account excluding non-monetary gold and other precious metals
To better align with UK trade statistics we have introduced a new dataset to reflect current account movements excluding the erratic trading pattern of non-monetary gold and other precious metals. Table BX presents new trade in goods and current account aggregates and includes the following new series:
- FUS7: Exports of goods and services excluding precious metals
- FUS8: Total trade exports excluding precious metals
- FUS9: Current account excluding precious metals credits
- FUT2: Imports of goods excluding precious metals
- FUT3: Total trade imports excluding precious metals
- FUT4: Current account excluding precious metals debits
- FUT5: Trade in goods excluding precious metals balance
- FUT6: Total trade excluding precious metals balance
- FUT7: Current account balance excluding precious metals
- FUT8: Trade in goods balance excluding precious metals as a percentage of GDP
- FUT9: Total trade balance excluding precious metals as a percentage of GDP
- FUU2: Current account balance excluding precious metals as a percentage of GDP
Quality and methodology
More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Balance of payments QMI.
The balance of payments estimates includes data on the trade in precious metals. In recent periods the trade in precious metals, notably non-monetary gold, has been more volatile than usual. In this release we are introducing estimates that exclude trade in precious metals (Table BX) so the underlying trends in the current account balance are clearer.
End of EU exit transition period
After the transition period ends on 31 December 2020, the UK statistical system will continue to collect and produce our wide range of economic and social statistics. We are committed to continued alignment with international statistical standards, enabling comparability both over time and internationally and we will work with users of statistics to make sure they have the data they need to support the decisions they have to make.
Additionally, the Withdrawal Agreement outlines a need for UK gross national income (a fundamental component of the national accounts, which includes GDP) statistics to remain in line with those of other EU countries until EU budget contributions are finalised for the years in which we were a member, and making budget contributions during the transition period. To ensure this comparability during this period, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards.
As the shape of the UK’s future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.
In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK’s well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available in early 2021.
We will continue to produce our UK Balance of Payments statistics in line with the UK Statistics Authority’s Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards. This is based on the International Monetary Fund’s (IMF’s) Balance of Payments Manual sixth edition (BPM6) (PDF, 3.0MB), until those standards are updatedNôl i'r tabl cynnwys
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