Balance of payments, UK: January to March 2024

• The underlying UK current account deficit, excluding precious metals, narrowed by £2.5 billion to £23.8 billion, or 3.5% of gross domestic product (GDP), in Quarter 1 (Jan to Mar) 2024.

• The UK current account deficit, when trade in precious metals is included, narrowed to £21.0 billion, or 3.1% of GDP.

• The total trade deficit, excluding precious metals, narrowed to £6.2 billion, as the goods deficit narrowed to £44.6 billion, and services surplus expanded to £38.5 billion.

• The primary income account deficit widened to £10.9 billion, or 1.6% of GDP.

• The UK recorded a net financial inflow of £1.2 billion, down from a £8.8 billion inflow in the previous quarter, as portfolio investment outflows increased.

• The preliminary estimate of the UK's net international investment liability position at 31 March 2024 was £706.0 billion.

The UK’s current account balance is a measure of the country’s balance of payments (BoP) with the rest of the world in trade, primary income, and secondary income.

The underlying UK current account deficit, excluding precious metals, narrowed by £2.5 billion to £23.8 billion, or 3.5% of gross domestic product (GDP), in Quarter 1 (Jan to Mar) 2024.

Table 1 summarises the latest current account data for Quarter 1 2024.

Trade

The total trade deficit for goods and services decreased to £6.2 billion (0.9% of GDP) in Quarter 1 2024, from £12.5 billion (1.8% of GDP) in Quarter 4 2023.

The trade in goods deficit narrowed by £4.3 billion from the previous quarter to £44.6 billion, or 6.5% of GDP. The trade in services surplus increased by £2.0 billion to £38.5 billion, or 5.6% of GDP.

Figure 3: Both imports and exports of goods fell in Quarter 1 2024

Changes in imports and exports of goods, excluding unspecified goods, £ billion, Quarter 1 (Jan to Mar) 2024 compared with Quarter 4 (Oct to Dec) 2023

The trade in goods deficit narrowed by £4.3 billion to £44.6 billion in Quarter 1 2024, as the value of imports fell by £5.8 billion to £135.8 billion, and the value of exports decreased by £1.4 billion to £91.2 billion.

Goods imports fell by £5.8 billion because of a decrease in all commodities except imports of semi-manufactured goods and imports of food, beverages and tobacco, which both recorded a small increase of £0.1 billion. The largest falls in imports were recorded in the following commodities:

• finished manufactured goods (£3.6bn)

• oil (£1.3bn)

• other fuels (£0.9bn)

Goods exports levels decreased by £1.4 billion compared to the previous quarter. The largest decreases in exports were recorded in the following commodities:

• finished-manufactured goods (£0.9 billion)

• other fuels (£0.4 billion)

• semi-manufactured goods (£0.3 billion)

The trade in services surplus increased by £2.0 billion to £38.5 billion in Quarter 1 2024, as exports of services increased by £1.2 billion. The largest increases were recorded in exports of insurance and pensions services, and exports of travel services, which both increased by £0.7 billion. Imports of services decreased by £0.8 billion.

Primary income

The primary income account records income the UK receives and pays on financial and other assets, along with compensation of employees.

The primary income account deficit increased to £10.9 billion, or 1.6% of GDP, in Quarter 1 2024, as UK earnings (credits) decreased by £3.1 billion to £95.6 billion. UK payments (debits) decreased by £0.7 billion to £106.5 billion.

Secondary income

The secondary income account shows current transfers between residents and non-residents.

The secondary income deficit increased from £5.3 billion (0.8% of GDP) in Quarter 4 2023 to £6.8 billion (1.0% of GDP) in Quarter 1 2024.

A current account deficit, which the UK has experienced each year since 1984, places the UK as a net borrower with the rest of the world. This indicates that overall expenditure in the UK exceeds national income. 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 financial account recorded a net inflow of £1.2 billion in Quarter 1 (Jan to Mar) 2024, after recording a net inflow of £8.8 billion in Quarter 4 (Oct to Dec) 2023.

Net acquisition of UK assets represented a financial outflow of £244.2 billion in Quarter 1 2024. Compared with Quarter 4 2023, there was increased portfolio investment in debt securities abroad by UK monetary financial institutions (banks) and increased other investment abroad, as UK residents increased investments in foreign currency, loans and deposits.

Net incurrence of UK liabilities was an inflow of £245.4 billion in Quarter 1 2024. Foreign monetary financial institutions (banks) increased their deposits in the UK, mainly in foreign currency.

Further details are available in our Quarterly economic commentary articles.

The international investment position (IIP) represents the UK's balance sheet with the rest of the world. IIP measures the difference between the net stock of assets and liabilities at a point in time, which we report as the last day of each quarter.

The preliminary estimate of the IIP net liability position was £706.0 billion at the end of Quarter 1 (31 March) 2024.

Users should be aware that the preliminary IIP estimates of Quarter 3 (30 September) 2023, Quarter 4 (31 December) 2023, and Quarter 1 2024 are subject to more uncertainty than normal. This is because full processing of our Foreign Direct Investment (FDI) Survey data has been temporarily paused, as explained in Section 7: Measuring the data.

The UK asset position in the three months to 31 March 2024 was valued at £13,725.4 billion. The value of the UK liability position with the rest of the world was valued at £14,431.4 billion. Both assets and liabilities recorded increased revaluations. However, the influence of foreign equity markets rising more than the UK market has led to the narrowing of the IIP net liability position.

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.

Precious metals

In line with international standards, our headline trade statistics contain the UK's exports and imports of non-monetary gold. This trade can have a large effect on the size of and change in the UK's headline trade figures. This is because a substantial amount of the world's trade in non-monetary gold takes place on the London markets.

Further information on precious metals and their impact can be found in our UK trade bulletin.

Special drawing rights

Some International Monetary Fund (IMF) member countries have access to international reserve assets called special drawing rights (SDRs). A general allocation of SDRs, equivalent to approximately US $650 billion, became effective on 23 August 2021 and was allocated to participant countries in proportion to their existing quotas. The UK's SDR allocation was equivalent to $19,318 million and was received in August 2021.

Net errors and omissions

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

For more detailed definitions of terms used in the balance of payments, see our glossary (PDF, 123KB).

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 the coronavirus (COVID-19) pandemic

• 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 is the largest single data source for trade in services.

The main source of information for UK foreign direct investment (FDI) statistics is our 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.

Production of estimates from the FDI Survey was temporarily paused at the end of 2023, because of previous challenges in processing FDI survey data. This pause will allow us to review and revise procedures, so that we can safeguard timely and quality FDI estimates in the future.

As a result of the pause, the direct investment estimates for Quarters 3 (Jul to Sept) and 4 (Oct to Dec) 2023 in this bulletin are based on survey data carried forward from Quarter 2 (Apr to June) 2023. The estimates for Quarter 1 (Jan to Mar) 2024 do use survey data for Quarter 1 2024, but are based on simpler processing than normal. This is to provide greater sensitivity to the latest conditions. As a result, users should be cautious when interpreting FDI estimates for the latest three quarters.

Full FDI Survey processing will resume with our annual Foreign direct investment involving UK companies: 2022 bulletin. This bulletin will provide estimates for 2022 and is being published on 9 August 2024. Following this, fully processed quarterly data for Quarter 3 2023 onward will be introduced to balance of payments and sector accounts estimates later in 2024; in September if available, or alternatively in December.

We plan to publish our annual 2023 FDI estimates in December 2024 in our Foreign direct investment involving UK companies bulletin to normal timetable. Quarterly 2023 estimates benchmarked on this data will appear in balance of payments and sector accounts statistics in December 2024. Users should be aware that compliance with the national accounts revisions policy will mean that from December 2024, until Pink and Blue Books 2025, published estimates of FDI in the national accounts will be benchmarked from annual data for years up to and including 2021 and for 2023, but not for 2022. Our Foreign direct investment involving UK companies: 2022 bulletin will include analysis of how subsequent inclusion of annual 2022 estimates will affect the main direct investment series in national accounts. This will provide users with more insight when analysing trend data and will be referenced in all quarterly national accounts publications, until Pink and Blue Books publication in 2025.

Changes affecting UK trade statistics

The arrangements for how the UK trades with the EU have changed since the UK left the EU on 31 January 2020.

HMRC implemented some data collection changes following Brexit, which affected statistics on UK trade in goods with the EU. We have adjusted our estimates of goods imports from the EU in 2021 and 2022 to account for these changes. However, a structural break remains in the full time series for goods imports from and exports to the EU from January 2021.

We therefore advise caution when interpreting and drawing conclusions from these statistics. More detail is provided in our Impact of trade in goods data collection changes on UK trade statistics: summary of adjustments and the structural break from 2021 article.

Quality and methodology

More quality and methodology information 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 and International Investment Position Manual: Sixth Edition (BPM6) (PDF, 3.0MB), until those standards are updated.