UK Balance of Payments, The Pink Book: 2023

• The UK's current account deficit widened to £78.3 billion or (3.1% of gross domestic product (GDP)) in 2022, up from £10.8 billion (0.5% of GDP) in 2021.

• The total trade balance moved to a deficit of 2.7% of GDP in 2022, from a deficit of 0.2% of GDP in 2021, with the value of both imports (£901.8 billion) and exports (£833.9 billion) recovering to above pre-coronavirus (COVID-19) pandemic levels in 2022.

• The primary income surplus was broadly stable in 2022 (£12.7 billion) compared with 2021 (£12.5 billion); both values were equivalent to 0.5% of GDP.

• Financial inflows decreased by £133.0 billion to £237.0 billion and financial outflows decreased by £180.2 billion to £172.6 billion between 2021 and 2022, increasing the UK's net liabilities flows to £64.4 billion.

• The net international investment position (IIP) liability narrowed to £244.4 billion (9.8% of GDP) at the end of 2022, from £320.0 billion (14.0% of GDP) at the end of 2021, largely because of increases in net other investment and net portfolio investment.

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

The UK's current account deficit widened to £78.3 billion or 3.1% of gross domestic product (GDP) in 2022, up from £10.8 billion or 0.5% of GDP in 2021.

The trade balance moved to a deficit of 2.7% of GDP in 2022 from a deficit of 0.2% of GDP in 2021. The primary income and secondary income balances were little changed in 2022 compared with 2021 and remained at a surplus of 0.5% of GDP and a deficit of 0.9% of GDP, respectively.

The UK recorded the second largest current account deficit of the economies in the G7 in 2022, at 3.1% of nominal GDP. The United States recorded the largest deficit, expanding to 3.8% of GDP in 2022.  France and Italy moved to a deficit of 1.9% and 1.5% of GDP, respectively, in 2022, following surpluses in 2021 (of 0.3% and 2.4%, respectively). Canada's trade deficit was unchanged in 2022 compared with 2021 at 0.3% of GDP. Germany and Japan recorded decreases in their trade surpluses from 7.8% to 4.3% and from 3.9% to 1.9%, respectively, between 2021 and 2022. 

Outside the G7 economies, energy-exporting countries tended to experience an improvement in their current account balances, as higher oil and gas prices increased the value of their net exports. Norway's current account surplus increased from 13.6% to 30.4% of GDP, and Saudi Arabia's increased from 5.1% to 13.9% in 2022.

The UK trade balance moved to a deficit of 2.7% of gross domestic product (GDP) in 2022 from a deficit of 0.2% in 2021. This reflects a larger increase in the value of imports than in exports in 2022 (Figure 3).

Exports and imports recovered to above pre-coronavirus (COVID-19) pandemic levels in 2022 (Figure 3), with exports increasing to £833.9 billion in 2022 from £676.0 billion in 2021, and imports increasing to £901.8 billion from £679.5 billion over the same period. Between 2021 and 2022, exports and imports of goods increased by £91.4 billion and £147.2 billion, respectively, while exports and imports of services increased by £66.5 billion and £75.0 billion, respectively, with the latter led by an increase in travel services following the lifting of coronavirus travel restrictions.

Trade in goods

The trade in goods deficit increased from £163.4 billion (7.2% of GDP) in 2021 to £219.3 billion (8.8% of GDP) in 2022. Some of the main contributors to the increase in the trade deficit (Figure 4) were:

• a larger deficit in finished manufactured goods, which increased from £70.9 billion (3.1% of GDP) in 2021 to £105.5 billion (4.2% of GDP) in 2022

• a larger deficit in fuels other than oil, which increased from £19.2 billion (0.8% of GDP) in 2021 to £41.7 billion (1.7% of GDP) in 2022

Imports of finished manufactured goods (for example, electrical machinery and mechanical machinery), and fuels other than oil (for example, coal, gas and electricity) increased by £55.3 billion and £30.8 billion, respectively, in 2022. The increase in fuels other than oil was largely because of increased gas imports linked to increased gas prices following the Russian invasion of Ukraine, which destabilised supply chains in 2022, as shown in our UK trade in goods, year in review: 2022 article.

These estimates include non-monetary gold. Movements in non-monetary gold, a 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 2022 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.

Notes:

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, 2.9 MB) and do not represent the UK policy on disputed territories.

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You can also explore the 2022 trade in goods data by commodity, such as car exports to the EU, and UK tea or coffee imports.

Select a commodity from the drop-down menu or select the levels with your digit or cursor to explore the data.

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Notes:

1. For more information about our methods and how we compile these statistics, see our Trade in goods, country-by-commodity experimental data: 2011 to 2016 article. Users should note that the data published alongside this release are 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, via the statistical agencies for bilateral countries or through central databases, such as UN Comtrade.
3. These interactive charts denote country boundaries in accordance with statistical classifications set out within Appendix 4 of the Balance of Payments (BoP) Vademecum (PDF, 2.9MB) and does not represent the UK policy on disputed territories.

Trade in services 

The trade in services surplus decreased from £159.9 billion (7.0% of GDP) to £151.3 billion (6.0% of GDP) in 2022. Some of the main contributors to the decreased surplus (Figure 5) were:  

• travel services moved from a surplus of £3.5 billion (0.2% of GDP) in 2021 to a deficit of £20.7 billion (0.8% of GDP) in 2022 

• transport services moved from a surplus of £4.4 billion (0.2% of GDP) in 2021 to a deficit of £0.7 billion (0.0% of GDP) in 2022 

Travel services exports increased by £25.6 billion while imports increased by £49.9 billion between 2021 and 2022. Meanwhile, transport services exports and imports increased by £9.2 billion and £14.2 billion, respectively. These were slightly offset by an increase in the other business services surplus from £56.4 billion (2.5% of GDP) to £65.3 billion (2.6% of GDP) in 2022.

Travel services saw the largest increase in exports and imports in 2022 as pandemic-related restrictions on travel were eased, with exports and imports recovering further compared with 2021. Exports and imports of travel services exceeded pre-pandemic levels in 2022.  

Trade in services data can be found in Section 3 of our data tables.

The primary income surplus was broadly stable in 2022 (£12.7 billion) compared with 2021 (£12.5 billion); both values were equivalent to 0.5% of gross domestic product (GDP). This reflects the net balance surplus of direct investment (£90.6 billion), largely offset by the net balance deficit of portfolio investment (£63.8 billion) and other investment (£15.3 billion) in 2022.

There was an increase of £71.4 billion on UK earnings from its foreign investments, to £285.0 billion in 2022, because of an increase in earnings on other investment (£37.8 billion), direct investment (£20.1 billion) and portfolio investment (£11.8 billion). Meanwhile, there was an increase in foreign earnings on investments in the UK of £71.2 billion to £272.3 billion, because of an increase in earnings on other investment (£43.2 billion) and portfolio investment (£34.4 billion). These were slightly offset by a decrease in foreign earnings on direct investment in the UK (£7.6 billion). A contributing factor to the increase in earnings in both directions relates to increasing rates of return (as shown in Figure 7).

Primary income data can be found in Section 4 of our data tables.

Direct investment

Net direct investment income to the UK increased by £27.7 billion, from £62.9 billion in 2021 to £90.6 billion in 2022. This was mainly because of a rise in UK earnings on direct investment abroad of £20.1 billion from £141.7 billion (6.2% of GDP) in 2021 to £161.8 billion (6.5% of GDP) in 2022. There was also a decrease in foreign earnings on direct investment in the UK of £7.6 billion from £78.7 billion (3.4% of GDP) in 2021 to £71.2 billion (2.8% of GDP) in 2022. The overall increase in direct investment earnings to the UK was largely because of a £20.9 billion increase in earnings on equity in the post-coronavirus (COVID-19) pandemic recovery period.

Portfolio investment

Net portfolio investment income fell by £22.6 billion from a deficit of £41.2 billion (1.8% of GDP) in 2021 to a deficit of £63.8 billion (2.5% of GDP) in 2022. An increase of £34.4 billion in foreign investors earnings on portfolio investment in the UK was partially offset by an increase of £11.8 billion on UK earnings on portfolio investment abroad. An increase of £16.2 billion in foreign investor earnings on central government portfolio investment was the main reason for this.

Other investment

There was an increase in credits and debits of other investment income in 2022. The net other investment income deficit increased from £9.9 billion (0.4% of GDP) in 2021 to £15.3 billion (0.6% of GDP) in 2022, as foreign earnings on other investment in the UK increased by £43.2 billion, while UK earnings on other investment abroad increased by £37.8 billion as interest rates started to increase.

Rate of return

The rate of return reflects how much income is produced from a stock of external investment that is held by UK and foreign investors. This rate of return is influenced by economic and financial factors, such as changes in interest rates. 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 2022, UK investors saw a 0.6 percentage point recovery in the rate of return on their overseas investments abroad from 2.1% to 2.7%. Non-residents also saw their rate of return in the UK recover by 0.6 percentage points from 1.9% to 2.5%. In 2022, as in 2021, the continued resumption of dividend payments and business earnings growth contributed to higher levels of return for investors, following the reporting of losses and withholding of dividend levels by companies during the coronavirus pandemic in 2020.

Figures 8 and 9 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 2022. The largest increase was seen in Africa, 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 in 2022 in Europe, the Americas and Asia.

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 an annual current account deficit since 1984.

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 10 shows that, since the global financial crisis, total net inward and outward flows were much reduced, and that the UK has, in some years, been reducing its foreign assets.

Financial flows decreased between 2021 and 2022 as inflows decreased from £370.0 billion to £237.0 billion and financial outflows decreased from £352.8 billion to £172.6 billion, respectively.

For UK assets (outflow), this was most marked in other investments, as UK investment decreased from £297.1 billion in 2021 to £192.4 billion in 2022. Within direct investment the reinvestment of earnings remained stable at £69.0 billion in 2022. Partially offsetting these was net selling of foreign equities, which may suggest a movement from equities to the more liquid cash (other investment).

For liabilities, the most marked decrease in non-resident investment was also other investment, decreasing from £227.4 billion in 2021 to £126.9 billion in 2022. In addition, portfolio investment decreased as non-residents sold UK equities.

Information on the financial account can be found in Section 7 of our data tables.

The international investment position (IIP) measures the stock of assets and liabilities at the end of a period (which for annual estimates is 31 December), 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.

Interactive IIP assets and liabilities

Notes:

1. Please note, this experimental map includes the UK’s largest counterpart countries.
2. Investment data for 2022 does not include annual benchmark data.
3. Historical data can be found in Chapter 10.

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The net IIP liability narrowed at the end of 2022 to £244.4 billion (9.8% of gross domestic product (GDP)) from £320.0 billion (14.0% of GDP) at the end of 2021. This was largely because of a narrowing of the portfolio investment balance and a widening of the other investment net asset position, which more than offset the increase in the direct investment liability position. Figures 12 and 13 show the highest currency revaluations since 2016 and help to explain the improvement in the net IIP in 2022.

Note that from 2020 onwards, foreign direct investment statistics have changed. We advise caution when comparing 2020 onwards with previous years. 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 £184.4 billion while UK liabilities, excluding derivatives and special drawing rights, increased by £101.7 billion between 2021 and 2022. Therefore, the net position in 2022, excluding derivatives, special drawing rights and reserve assets, decreased for a sixth consecutive year to a net liability of £277.0 billion (11.1% of GDP).

UK liabilities to foreign investors in portfolio investment decreased by £498.8 billion while other investment and direct investment increased by £434.9 billion and £170.5 billion, respectively, between 2021 and 2022.

Both assets and liabilities experienced increased currency revaluations, by £861.7 billion and £525.1 billion, respectively. These were the main contributors to asset and liability totals and the highest currency revaluations since 2016 as the British pound devalued against the US dollar over the year to the end of 2022.

Partially offsetting the currency revaluation rises were decreases in the valuation of global stock markets.

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.

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.

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) restrictions

• 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.

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 2021 article. This includes methodological changes to UK education-related travel exports, expanding the use of administrative data sources, as explained in our Methodological improvements to UK education services exports article. This has increased the value of services exports compared with earlier estimates.

Data collection changes affecting UK trade statistics

EU imports and exports

HM Revenue and Customs (HMRC) implemented a data collection change as shown in their Methodology changes to trade in goods statistics from March 2022 article. This affected data on goods exports from Great Britain to the EU in January 2021, and data on goods imports from the EU to Great Britain in January 2022. We have applied adjustments to our estimates of goods imports from the EU for 2021, as shown in our Trade in goods: Adjustments to 2021 EU imports estimates, by chapter dataset, to reflect this data collection change, which brought imports and exports statistics onto a like-for-like basis in 2021.

A discontinuity remains between 2020 and 2021 for imports from and exports to the EU; the estimated impact of the data collection changes (prior to when the 2021 adjustment to imports was made) is outlined in our Impact of trade in goods data collection changes on UK trade statistics: 2020 to 2022 article. Note that the impact in percentage terms was similar for imports and exports, meaning less impact in balance of trade terms.

Staged Customs Controls

In 2021, the use of Staged Custom Controls (SCC) allowed customs declarations to be reported up to 175 days after the date of import for imports of non-controlled goods from the EU to Great Britain. The UK government introduced full customs controls in January 2022, as explained on GOV.UK, while July 2022 marked the first full month of data where delayed customs declarations submitted under SCC could not be included. Temporary arrangements still apply for imports of goods from Ireland to Great Britain.

In our Impact of trade in goods data collection changes on UK trade statistics: further update on Staged Customs Controls article published on 3 July 2023, we analysed the impact of SCC on trade in goods data for imports from the EU to Great Britain in 2022.

To account for the impact of SCC, which led to some double counting, we have now applied a downward adjustment of £6.0 billion to our estimates of goods imports from the EU for the period January to June 2022. These revised estimates were included in our GDP quarterly national accounts, UK: April to June 2023 and our Balance of payments, UK: April to June 2023 releases published on 29 September 2023, and have now been published across all releases in the trade in goods series.

Our Impact of trade in goods data collection changes on UK trade statistics: adjustments to 2022 EU imports estimates article summarises these adjustments to our estimates of goods imports from the EU in the first six months of 2022.

Developing Foreign Direct Investment (FDI) statistics

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 and we advise caution when comparing 2020 onwards with previous years.

Quality and methodology

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