Balance of payments, UK: January to March 2021

A measure of cross-border transactions between the UK and rest of the world. Includes trade, income, capital transfers and foreign assets and liabilities.

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Release date:
30 June 2021

Next release:
30 September 2021

1. Main points

  • The underlying UK current account deficit excluding non-monetary gold and other precious metals narrowed to £12.7 billion, or 2.3% of gross domestic product (GDP) in Quarter 1 (Jan to Mar) 2021.

  • In Quarter 1 2021, the total trade deficit excluding precious metals narrowed by £9.5 billion as imports of goods fell more than exports.

  • The primary income deficit widened to £8.6 billion or 1.6% of GDP in Quarter 1 2021 from £5.0 billion in Quarter 4 (Oct to Dec) 2020; this was because of a larger increase in payments to foreign investors on their UK investments.

  • The secondary income deficit narrowed as the UK's regular monthly payments to the EU stopped with effect from January 2021.

  • Financial flows decreased in Quarter 1 2021 with a net inflow to the UK of £28.5 billion, as non-residents continued to invest in UK equities and debt securities.

  • The UK's net international investment position liability position narrowed by £56.4 billion to £582.9 billion as the revaluation impact on UK debt securities decreased the value of UK liabilities more than the fall in the value of UK assets.


Please note that all current account and trade figures are excluding non-monetary gold and other precious metals unless otherwise stated.

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2. Current account

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

Table 1 summarises the latest current account data for Quarter 1 (Jan to Mar) 2021.


The trade in goods deficit narrowed in Quarter 1 2021 as both imports and exports fell significantly in the first quarter since the end of the EU-exit transition period. Import demand fell more sharply than exports after businesses stockpiled up to December 2020 in preparation for the UK leaving the single market and Customs Union while the UK remained in another national coronavirus (COVID-19) lockdown.

The trade in services balance remained stable in Quarter 1 2021.

Primary income

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

Both credits and debits have improved in Quarter 1 2021. This led to the deficit widening as earnings increased more for non-residents on their UK investments than UK residents’ investments abroad.

Secondary income

The secondary income deficit narrowed, reflecting the ending of the UK’s regular Value Added Tax (VAT) and gross national income-based payments to and receipts from the EU as the UK reached the end of the withdrawal transition period.

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3. Financial account

A current account deficit places the UK as a net borrower with the rest of the world, indicating that overall expenditure in the UK exceeds national income. The UK must attract net financial inflows to finance its current (and capital) account deficit, which 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 decreased net inflow of £28.5 billion in Quarter 1 (Jan to Mar) 2021, from a net inflow of £38.7 billion recorded in Quarter 4 (Oct to Dec) 2020. The net inflow was mostly because of non-residents investing in UK-issued debt securities (£65.1 billion) and UK investors selling foreign equities (£53.1 billion). Partially offsetting these was a large increase in UK other investment assets as UK monetary financial institutions deposited currency (£62.2 billion) and extended loans (£36.5 billion) abroad.

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4. International investment position

The international investment position (IIP) examines the UK’s balance sheet with the rest of the world, measuring the difference between the net stock of assets and liabilities.

In Quarter 1 (Jan to Mar) 2021, the IIP recorded a decrease in the value of its net liability position to £582.9 billion from £639.2 billion in Quarter 4 (Oct to Dec) 2020.

In Quarter 1 2021, the gross asset and liability positions decreased by £446.5 billion and £502.8 billion respectively. This was mostly because of a large decrease in financial derivative activity as market volatility continued to recede from the height of the coronavirus (COVID-19) pandemic.

Despite positive investment flows, other changes in volume have impacted the gross values. The British pound appreciated against other major currencies reducing the value of assets and liabilities denominated in foreign currency, while liabilities were also impacted by a decrease in the price of debt securities.

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5. Balance of payments data

Balance of payments
Dataset | Released 30 June 2021
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 30 June 2021
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 30 June 2021
Quarterly summary information on the size and direction of the revisions made to the data covering a five-year period, UK.

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6. 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.

Precious metals

In line with international standards, the Office for National Statistics' (ONS') headline trade statistics contain the UK's exports and imports of non-monetary gold. Because a significant amount of the world's trade in non-monetary gold takes place on the London markets, this trade can have a large impact on the size of and change in the UK's headline trade figures.

Further information on precious metals and their impact can be found in the UK trade release.

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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7. 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 (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 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. From Quarter 1 2021 we are incorporating improvements to FDI statistics as set out in the FDI development plan.

Impact of coronavirus 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.

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8. Strengths and limitations

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.

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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Contact details for this Statistical bulletin

Jamie Pritchard
Telephone: +44 (0)1633 456106