UK Balance of Payments, The Pink Book: 2022

Balances between inward and outward transactions, providing a net flow of transactions between UK residents and the rest of the world and reports on how that flow is funded.

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Email Jamie Pritchard

Dyddiad y datganiad:
31 October 2022

Cyhoeddiad nesaf:
To be announced

1. Main points

  • The UK current account deficit in 2021 was £45.6 billion or 2.0% of gross domestic product (GDP), narrowing from £67.5 billion or 3.2% of GDP in the previous year.

  • The total trade balance returned to a deficit of £17.6 billion or 0.8% of GDP in 2021, after a surplus of £7.6 billion or 0.4% of GDP in 2020, as global supply chains started to stabilise, but imports and exports remained below pre-coronavirus (COVID-19) pandemic levels.

  • The primary income deficit reduced to £9.9 billion or 0.4% of GDP in 2021, narrowing from £47.4 billion or 2.2% of GDP in 2020, as UK earnings on investment abroad increased by more than foreign earnings on investment in the UK.

  • A fall in UK payments to EU institutions in 2021 narrowed the secondary income deficit to £18.1 billion or 0.8% of GDP from £27.7 billion or 1.3% of GDP in 2020.

  • The financial account recorded a net inflow in 2021 as UK liabilities to the rest of the world increased by £353.8 billion while UK residents increased their foreign assets by £303.4 billion over the same period.

  • The net international investment position (IIP) expanded to £424.2 billion in 2021 from £384.5 billion in 2020.


Please note that all current account and trade figures include non-monetary gold (NMG) and other precious metals unless otherwise stated. All comparisons with GDP are in nominal or current prices.

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2. Current account overview

The current account records international trade, cross-border income that is associated with the international ownership of financial assets, and current transfers (for example, foreign aid or remittances). It captures the flow of transactions between the UK and the rest of the world. Trade and investment income flows typically tend to explain movements in the UK's current account balance:

  • trade balance - a measure of net international trade
  • primary income balance - a measure of the balance between resident and non-resident income
  • secondary income balance - a measure of transfers between residents and non-residents

This publication includes a range of methodological and data source improvements presented in our Detailed assessment of changes to balance of payments annual estimates: 1997 to 2020 article.

The UK's current account deficit narrowed substantially from £67.5 billion or 3.2% of gross domestic product (GDP) in 2020 to £45.6 billion or 2.0% of GDP in 2021. The coronavirus (COVID-19) pandemic had wide-ranging impacts on the UK's international transactions across 2020 and 2021. This reflects the effects of supply chain issues, price pressures and public health restrictions that were in place around the world over that period.

The trade balance moved from a surplus equal to 0.4% of GDP in 2020 to a deficit equal to 0.8% of GDP in 2021, whereas the primary and secondary income accounts both remained in deficit. The primary income deficit narrowed from 2.2% to 0.4% of GDP in 2021, and secondary income deficit narrowed from 1.3% to 0.8% of GDP over the same period.

The UK recorded the second largest current account deficit, 2.0% of GDP, of the economies in the G7 in 2021. The United States recorded the largest deficit, expanding to 3.6% of GDP in 2021, and Canada's deficit narrowed to 0.0%. There was a marked change in the current account in France, switching from a deficit in 2020 (1.8% of GDP) to a surplus (0.4% of GDP) in 2021.

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3. Trade

Gross trade flows started to recover from the coronavirus (COVID-19) pandemic, although the effects of public health restrictions affected domestic and foreign demand. There have also been impacts on global supply chains, which likely had an adverse impact on trade flows. The UK trade balance moved from a surplus of 0.4% of gross domestic product (GDP) in 2020 to a deficit of 0.8% in 2021, reflecting a larger increase in imports (7.3%) than exports (3.2%).  

Imports and exports remained below pre-pandemic levels in 2021 (Figure 3). There was a slower recovery in services trade between 2020 and 2021, as imports increased by 4.8% and exports by 1.1%, compared with 8.3% and 5.3%, respectively, for goods.

Trade in goods

The trade in goods deficit increased from £133.5 billion (6.3% of GDP) in 2020 to £153.8 billion (6.8% of GDP) in 2021. Some of the main contributors to the increase in the trade deficit (Figure 4) were:

  • a larger deficit in fuels other than oil, which increased from £4.3 billion (0.2% of GDP) to £18.9 billion (0.8% of GDP) in 2021

  • a larger deficit in semi-manufactured goods, which increased from £21.9 billion (1.0% of GDP) to £30.9 billion (1.4% of GDP) in 2021

Imports for fuels other than oil (coal, gas and electricity) and semi-manufactured goods increased by £17.3 billion and £12.5 billion, respectively, in 2021. Fuels other than oil were driven by increased gas imports since the middle of 2021, linked to rising wholesale gas prices because of increased global gas demand following the easing of COVID-19 pandemic restrictions, lower domestic renewable energy production, and higher gas demand in Asia, among other factors. The increase in semi-manufactured goods was because of increased imports of chemicals, and precious stones and metal. The increase in chemicals imports was driven by imports of medicinal and pharmaceuticals products from the United States and Switzerland, and other chemicals from China. Movements in non-monetary gold, an important component of precious metals, can be highly volatile and tend to distort trends in goods exports and imports. Trade in goods data can be found in section 2 of our data tables.

Explore the 2021 trade in goods data using our interactive tools

Explore the 2021 trade in goods data using our interactive tools. Our data break down UK trade in goods across 234 countries by 125 commodities.

Use our map to get a better understanding of what goods the UK traded with a country. Select a country by hovering over it or using the drop-down menu.

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  1. For more information about our methods and how we compile these statistics, please see Trade in goods, country-by-commodity experimental data: 2011 to 2016. Users should note that the data published alongside this release are official statistics and no longer experimental.

  2. These data are our best estimate of these bilateral UK trade flows. Users should note that alternative estimates are available, in some cases, through the statistical agencies for bilateral countries or through central databases such as UN Comtrade.

  3. This interactive map denotes country boundaries in accordance with statistical classifications set out within Appendix 4 of the Balance of Payments (BoP) Vademecum (PDF, 1.1MB) and do not represent the UK policy on disputed territories.

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Trade in services

The trade in services surplus decreased from £141.1 billion (6.7% of GDP) to £136.3 billion (6.0% of GDP) in 2021, which includes contractions in gross trade flows, particularly in intellectual property and transport. Some of the main contributors to the decreased surplus (Figure 6) were:

  • intellectual property services surplus decreasing from £5.7 billion (0.3% of GDP) to £3.9 billion (0.2% of GDP) in 2021

  • transport services surplus decreasing from £5.1 billion (0.2% of GDP) to £4.3 billion (0.2% of GDP) in 2021

  • travel services surplus increasing from £1.7 billion (0.1% of GDP) to £4.1 billion (0.2% of GDP) in 2021

  • personal, cultural and recreation services deficit increasing from £2.8 billion (0.1% of GDP) to £3.6 billion (0.2% of GDP) in 2021

  • insurance and pension services surplus increasing from £10.2 billion (0.5% of GDP) to £12.3 billion (0.5% of GDP) in 2021

Financial services saw the largest fall in exports in 2021 (Figure 7). According to modes of supply data from 2020, this service type conducts large amounts of trade remotely and does not involve physical movement of people across borders. This suggests that factors other than the pandemic have affected this service; for example, the UK-EU trade and Co-operation Agreement (TCA) contains limited provision for access in financial services (PDF, 522KB). The fall in financial services trade with the EU was driven by exports of explicitly charged and other financial services. Respondents to the Quarterly International Trade in Services (ITIS) Survey who commented on the EU exit reported seeing a detrimental impact on business because of having to restructure or relocate aspects of the business to other European countries, such as share and derivatives trading.

Travel services exports recovered somewhat in 2021 compared with 2020, though remaining below pre-pandemic levels overall. The national lockdowns, quarantine regulations and severe travel restrictions that were still in place across the globe explain the significant fall in international travel compared with 2019. However, these figures should be treated with caution as the estimates are subject to higher sampling errors than previous estimates released. Trade in services data can be found in section 3 of our data tables.

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4. Investment income

The recovery from the coronavirus (COVID-19) pandemic affected investment income flows in 2021. The primary income deficit narrowed by £37.4 billion from £47.4 billion in 2020 (2.2% of gross domestic product (GDP)) to £9.9 billion in 2021 (0.4% of GDP), as UK earnings on investments abroad recovered more quickly than foreign earnings on direct investment in the UK.

There was an increase of £49.3 billion on UK earnings from its foreign investments, to £186.3 billion in 2021, because of an increase in direct investment earnings (£58.0 billion), although this was subdued by a continued fall in earnings from other investments abroad, which fell by £7.7 billion to £17.7 billion. Net primary income was partially offset by a less pronounced increase in foreign earnings on direct investment in the UK of £6.5 billion to £73.8 billion. Primary income data can be found in section 4 of our data tables.

Direct investment

The UK experienced a considerable rise in earnings of direct investment abroad of £58.0 billion from £57.1 billion in 2020 to £115.1 billion (5.1% of GDP) in 2021. There was a smaller increase in foreign earnings on direct investment in the UK from £67.2 billion in 2020 to £73.8 billion (3.2% of GDP) in 2021. Global economic output began to recover from the COVID-19 pandemic in 2021. The increase in direct investment earnings was driven by a £59.4 billion increase in reinvested earnings on equity, which may be as a result of recovered business profitability post-pandemic. We advise caution when comparing 2020 foreign direct investment (FDI) results with earlier years because of changes in FDI statistical populations and sampling methods. More details can be found in our Foreign direct investment statistics, overview of methods changes: 2020 article.

Portfolio investment

Net portfolio investment income fell by £17.3 billion in 2021 to a deficit of £41.8 billion; this is now closer to 2019 pre-pandemic levels (£43.9 billion deficit). This fall is driven almost exclusively by an increase of £17.2 billion in foreign earnings on portfolio investment in the UK. A main driver is the £6.9 billion increase in foreign earnings on central government portfolio investment; this may reflect the increased volume of government borrowing to support pandemic relief packages, including the Coronavirus Job Retention Scheme and vaccine procurement.

Other investment

There was a reduction in credits and debits of other investment income in 2021. The current net other investment income deficit continued to narrow as earnings on other investment in the UK fell (£8.8 billion) by more than investments abroad (£7.7 billion). UK expansionary monetary policy kept interest rates low, which may help to explain the continued contraction in earnings on deposits and loans both in the UK and abroad.

Rate of return

The rate of return influences the decisions that investors make. Investors will be attracted to high expected rates of return; however, risk factors will also contribute towards decision making. In 2021, UK investors saw a 0.5 percentage point recovery in the rate of return on their overseas investments abroad from 1.4% to 1.9%. Non-residents saw their rate of return in the UK recover to a smaller extent from 1.8% to 1.9% in 2021. 2020 saw companies reporting losses and withholding dividend levels, and the resumption of dividend payment and business earnings growth contributed to higher levels of return for investors.

Figures 10 and 11 show the rate of return for UK investments abroad and foreign investments in the UK, broken down by continent. UK investors recorded some improved rates of return on their foreign investments in 2021. The largest increases were seen in Australasia and Oceania, while Africa fell for the second year in a row, where returns have historically been volatile because of their developing economies and proportion of investments in cyclical industries such as mining and quarrying. More developed economies continue to provide lower but more stable returns, increasing slightly in 2021.

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5. Financial account

A current account deficit places the UK as a net borrower with the rest of the world, so the UK must attract net financial inflows to finance its current (and capital) account deficit. This can be achieved through either disposing of overseas assets to overseas investors or accruing liabilities with the rest of the world. The UK has run a current account deficit in each quarter since Quarter 3 (July to Sept) 1998 or, when considering annual totals, 1983.

In the years prior to the global financial crisis (2008 to 2009), the UK funded its current account deficit by incurring more liabilities to non-residents rather than selling existing foreign assets. Figure 12 shows that, since the global financial crisis, total net inward and outward flows are much reduced, and that the UK has in some years been reducing its foreign assets.

Financial inflows (£353.8 billion) and outflows (£303.4 billion) increased in 2021. This was most marked in other investments, as assets increased by £295.9 billion and liabilities increased by £146.6 billion, most notably including cash deposits and loans. Information on the financial account can be found in section 7 of our data tables.

In 2021, the UK increased its liabilities as non-residents deposited £107.3 billion in UK banks, which consisted mostly of foreign currency (£83.5 billion). In addition to this, non-residents continued to invest in the UK stock market to the value of £4.3 billion and increased their direct investment to £12.7 billion.

Meanwhile, UK residents increased their foreign assets by increasing their deposits at foreign banks by £208.1 billion and extending short-term loans to non-residents of £94.3 billion. Offsetting the increase in the deposits and loans, UK residents disposed of their investment in foreign debt securities by £2.1 billion in 2021, and they moved away from foreign shares to the value of £39.6 billion.

UK direct investors bought equity capital (£29.6 billion). They also re-invested equity capital to the value of £50.4 billion.

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6. International investment position

The international investment position (IIP) measures the stock of assets and liabilities at the end of a period, and is the sum of the opening balance, financial flows and other changes (such as price and currency changes).

All else remaining the same, the widening in the current account deficit means the UK is more reliant on the rest of the world. This means either incurring net financial liabilities or selling existing assets to finance its borrowing from the rest of the world, and therefore the net liability would be expected to widen. However, there can also be revaluation effects and other changes in volume that do not reflect financial flows. Information on the IIP can be found in section 8 of our data tables.

UK international investment position (IIP) assets and liabilities 2021

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The net IIP liability position expanded in 2021 to £424.2 billion from £384.5 billion in 2020 (equivalent to 18.6% and 18.2% of gross domestic product (GDP), respectively). Net foreign direct investment reached its widest net liability position of £335.3 billion in 2021. From 2020 onwards, foreign direct investment statistics have changed. More details can be found in our Foreign direct investment statistics, overview of methods changes: 2020 article.

From this point forward, when we refer to investments, we use the three main types of investments (direct, portfolio and other) excluding financial derivatives and employee stock options and reserve assets. This is because it is possible to estimate the impact of both currency and price changes on the three main types of investments.

In most years, the financial flows are one of the main factors driving the change in the UK's assets and liabilities. The variations in stock not only reflect the accumulation of new assets and liabilities but also the disposal or revaluation of existing ones and changes in the sterling exchange rate. Changes in exchange rates affect the sterling value of UK assets abroad as they are mainly denominated in foreign currencies. Another factor that could affect the revaluation of these assets and liabilities is equity price movements, which can affect the value not the underlying volume.

The value of UK assets, excluding derivatives and reserve assets, increased by £345.0 billion while UK liabilities, excluding derivatives, increased by a higher £358.4 billion. Therefore, the net position, excluding derivatives and reserve assets, worsened for a fifth consecutive year to a net liability of £496.4 billion (21.8% of GDP).

Despite a negative £264.4 billion currency revaluation on the value of UK-held assets in 2021, positive foreign stock market performance coupled with positive flows led to a rise in net UK assets. UK liabilities to foreign investors in portfolio investment and other investment increased by £305.5 billion and £132.7 billion, respectively. Liabilities experienced a reduced currency revaluation (£117.4 billion) although saw a positive change as UK markets recovered from the pandemic.

To obtain the exchange rate impact, we have calculated currency changes by calculating sterling exchange rate movements against a basket of currencies. Similarly, price movements are modelled using a combination of stocks and bond indices including end-quarter share prices for the Dow Jones industrial, MSCI Europe ex UK, FTSE All share and Nikkei 225 exchanges. For more information, see our Analysis of the UK's international investment position: 2016 article.

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7. Balance of payments data

Balance of Payments, The Pink Book
Datasets| Released 31 October 2022
Annual summary of balance of payments accounts including the current account, capital transfers, transactions, and levels of UK external assets and liabilities.

UK Balance of Payments - The Pink Book time series
Dataset | Released 31 October 2022
Annual time series data for the UK Balance of Payments.

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8. Glossary

Balance of payments

The balance of payments is a statistical statement that summarises transactions between residents and non-residents during a period. It consists of the current account, capital account and financial account.

Current account

The current account is made up of the trade in goods and services account, the primary income account and the secondary income account. The difference in the monetary value of these accounts is known as the current account balance. A current account balance is in surplus if overall credits exceed debits, and it is in deficit if overall debits exceed credits.

Capital account

The capital account has two components: capital transfers and the acquisition (purchase) or disposal (sale) of non-produced, non-financial assets.

Capital transfers are those involving transfers of ownership of fixed assets, transfers of funds associated with the acquisition or disposal of fixed assets, and cancellation of liabilities by creditors without any counterparts being received in return. The sale or purchase of non-produced, non-financial assets covers intangibles such as patents, copyrights, franchises, leases and other transferable contracts, and goodwill.

Financial account

The financial account covers transactions that result in a change of ownership of financial assets and liabilities between UK residents and non-residents, for example, the acquisitions and disposals of foreign shares by UK residents. The accounts are presented by the functional categories of direct investment, portfolio investment, other investment, financial derivatives and reserve assets.

International investment position

The international investment position (IIP) is a statement that shows, at the end of the period, the value and composition of UK external assets (foreign assets owned by UK residents) and identified UK external liabilities (UK assets owned by foreign residents). The framework of international accounts sets out that the IIP is also presented by functional category, consistent with primary income and the financial account.

Net errors and omissions

Although the balance of payments accounts are, in principle, balanced, in practice imbalances between the current, capital and financial accounts arise from imperfections in source data and compilation. This imbalance, a usual feature of balance of payments data, is labelled net errors and omissions.

A more detailed glossary (PDF, 123KB) of terms used in the balance of payments is also available.

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9. Measuring the data

Data sources

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 (ITIS) (Office for National Statistics (ONS))

  • International Passenger Survey (ONS) -- this was suspended between March 2020 and January 2021 because of coronavirus (COVID-19)

  • 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, with HMRC being the largest for trade in goods. 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 on the banking sector. 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. In line with our Developing foreign direct investment statistics: 2021 article, we have reviewed and developed the population and sampling frame of FDI businesses. These changes have been introduced for reference periods from Quarter 1 (Jan to Mar) 2020 onwards.

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10. Strengths and limitations

Quality and methodology

More quality and methodology information (QMI) on strengths, limitations, appropriate uses, and how the data were created is available in the Balance of payments QMI.

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 updated.

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12. Cite this statistical bulletin

Office for National Statistics (ONS), released 31 October 2022, ONS website, statistical bulletin, UK Balance of Payments, The Pink Book: 2022

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Jamie Pritchard
Ffôn: +44 1633 456106