UK Balance of Payments, The Pink Book: 2024

• The UK's current account deficit moved to £53.3 billion, or 2.0% of gross domestic product (GDP) in 2023, widening in cash terms but narrowing as a proportion of GDP; this was from a downwardly revised £53.1 billion, or 2.1% of GDP, in 2022.
• The trade balance narrowed to a deficit of 0.6% of GDP in 2023 from a downwardly revised deficit of 1.7% of GDP in 2022.
• The primary income balance switched from a surplus of 0.5% of GDP in 2022 to a deficit of 0.7% of GDP in 2023.
• Financial inflows increased to £325.0 billion in 2023, affected mainly by other investment (deposits and loans) in the UK; financial outflows increased to £276.9 billion in 2023, with portfolio investment switching from a deficit to a surplus.
• The preliminary estimate of the UK’s net international investment liability position at the end of 2023 was £658.2 billion, up from £298.1 billion at the end of 2022; this was largely because of other investment, which switched from a net asset position in 2022 to a net liability position in 2023.
• Data from 2020 onwards have been open to revision in this publication and are consistent with data published in our Balance of payments, UK April to June 2024 bulletin; revisions to the current account are larger in 2022 than other years, as a result of incorporating improved data that include updated trade in services survey data and amended trade in goods estimates relating to gas imports and exports.

The current account records international trade, cross-border income associated with the international ownership of financial assets, and current transfers, like 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. This includes:

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

The UK’s current account deficit narrowed to 2.0% of gross domestic product (GDP) in 2023, down from a downwardly revised deficit of 2.1% of GDP in 2022. This was a widening in cash terms from £53.1 million in 2022 to £53.3 billion in 2023.

The trade balance moved to a deficit of 0.6% of GDP in 2023 from a downwardly revised deficit of 1.7% of GDP in 2022. The primary income balance switched from a surplus of 0.5% of GDP in 2022 to a deficit of 0.7% of GDP in 2023. The secondary income deficit narrowed slightly from a deficit of 0.9% in 2022 to a deficit of 0.7% in 2023.

The UK recorded the second largest current account deficit of the G7 economies in 2023, at 2.0% of nominal GDP. The United States recorded the largest deficit in the G7, at 3.3% of GDP in 2023.

The UK trade balance narrowed to a deficit of 0.6% of gross domestic product (GDP) in 2023 from a downwardly revised deficit of 1.7% in 2022. This reflects a small decrease in the trade in services surplus and a larger decrease in the trade in goods deficit (Figure 3).

Trade in goods

The trade in goods deficit decreased from 8.2% of GDP (£206.5 billion) in 2022 to 6.9% of GDP (£187.7 billion) in 2023.

One of the main contributors to the decrease in the goods trade deficit (Figure 4) was a smaller deficit in finished manufactured goods, like electrical machinery and mechanical machinery. This decreased from 4.1% of GDP (£104.0 billion) in 2022 to 3.2% of GDP (£87.7 billion) in 2023. Another main contributor was a smaller deficit in fuels other than oil, like coal, gas and electricity. This decreased from 1.2% of GDP (£30.9 billion) in 2022 to 0.8% of GDP (£20.7 billion) in 2023.

Exports of finished manufactured goods increased by £17.5 billion (0.6% of GDP), compared with an increase in imports of £1.2 billion in 2023. Imports of fuels other than oil decreased by £28.9 billion, which was more than the decrease in exports (£18.7 billion). The values of exports and imports of fuels other than oil were more similar to the 2021 values than the unusually high values seen in 2022. This was when gas prices rose considerably after 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. However, as they are classified as unspecified goods, they did not contribute to the deficit narrowing in 2022. Trade in goods data can be found in our 02 Trade in goods, The Pink Book dataset.

Explore the 2023 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 our Trade in goods, country-by-commodity experimental data: 2011 to 2016 article. Users should note that the data published alongside this bulletin are accredited official statistics and no longer official statistics in development (previously called experimental statistics).
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 in Appendix 4 of Eurostat’s Balance of Payments (BoP) Vademecum (PDF, 1.1MB). They do not represent the UK policy on disputed territories.

You can also explore the 2023 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. Select the levels by using your cursor or tapping with your finger to explore the data.

Notes:

1. For more information about our methods and how we compile these statistics, please see our Trade in goods, country-by-commodity experimental data: 2011 to 2016 article. Users should note that the data published alongside this bulletin are accredited official statistics and no longer official statistics in development (previously called experimental statistics).
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 in Appendix 4 of Eurostat’s Balance of Payments (BoP) Vademecum (PDF, 2.9MB). They do not represent the UK policy on disputed territories.

Trade in services

The trade in services surplus – when measured as a percentage of GDP – narrowed from 6.4% of GDP (£162.4 billion) in 2022 to 6.3% of GDP (£172.6 billion) in 2023. There was a widened deficit in travel services, from 0.5% of GDP (£11.5 billion) in 2022 to 0.8% of GDP (£22.2 billion) in 2023. There was a narrowed surplus for intellectual property services, from 0.3% of GDP in 2022 (£6.6 billion) to 0.2% of GDP (£4.9 billion) in 2023.

However, there was growth in the financial services surplus, which increased from £64.1 billion (2.5% of GDP) in 2022 to £73.2 billion (2.7% of GDP) in 2023. Similarly, the other business services surplus increased from £60.9 billion (2.4% of GDP) to £69.6 billion (2.6% of GDP) in 2023.

Travel services imports increased by £14.5 billion, while exports increased by £3.8 billion, between 2022 and 2023. Intellectual property imports increased by £2.7 billion, while exports increased by £1.0 billion.

Financial services exports increased by £11.1 billion, which was more than imports, which increased by £2.0 billion, between 2022 and 2023. The same was true for other business services, with exports increasing by £23.5 billion and imports increasing by £14.9 billion.

Trade in services data can be found in our 03 Trade in services, The Pink Book dataset.

The primary income balance switched from a surplus of 0.5% (£13.8 billion) of gross domestic product (GDP) in 2022 to a deficit of 0.7% (£18.3 billion) of GDP in 2023.

This change reflects a narrowing in the net surplus of direct investment, from £90.7 billion in 2022 to £63.1 billion in 2023. It also reflects a widened net deficit in other investment, from £15.3 billion in 2022 to £26.5 billion in 2023. The net deficit in portfolio investment narrowed from £62.6 billion in 2022 to £58.7 billion in 2023, partially offsetting the other movements.

Primary income data can be found in our 04 Primary income, The Pink Book dataset.

Net direct investment income to the UK decreased by £27.6 billion between 2022 and 2023. This was mainly because of a decrease in UK earnings on direct investment abroad of £20.9 billion, from £161.8 billion (6.4% of GDP) in 2022 to £140.9 billion (5.2% of GDP) in 2023. There was also an increase in foreign earnings on direct investment in the UK of £6.7 billion, from £71.1 billion (2.8% of GDP) in 2022 to £77.8 billion (2.9% of GDP) in 2023.

The net portfolio investment income deficit narrowed by £3.9 billion in 2023. An increase of £8.3 billion in foreign investors’ earnings on portfolio investment in the UK was more than offset by an increase of £12.2 billion on UK earnings on portfolio investment abroad. The main reason for this was an increase of £6.7 billion in UK investor earnings on other financial intermediaries’ portfolio investment.

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 non-resident investors. The rate of return is influenced by economic and financial factors, such as changes in interest rates. In 2023, UK investors saw an increase in the rate of return on their overseas investments abroad (assets) from 2.7% in 2022 to 3.6% in 2023. Non-residents saw a greater increase in their rate of return in the UK (liabilities) from 2.5% to 3.6% over the same period. Rates of return for both UK investors abroad and non-resident investors in the UK were higher in 2023 than at any other point since 2008. This, in part, reflects the increase in global interest rates in recent years.

Figure 8 shows the rate of return for UK investments abroad, broken down by continent. Figure 9 shows the rate of return for foreign investments in the UK, broken down by continent.

UK investors recorded generally improved rates of return on their foreign investments in 2023.

There was a decreased rate of return in Africa. In Africa, returns have historically been volatile because of their developing economies and the proportion of investments in cyclical industries like mining and quarrying. More developed economies in Europe, the Americas and Asia continue to provide more stable returns, which have increased in 2023. Overall, the highest returns came from Asia, and Australasia and Oceania in 2023; these returns were slightly higher than returns in Africa.

The UK is a net borrower with the rest of the world because of a current account deficit. The UK must attract net financial inflows to finance its current (and capital) account deficit. This can be achieved by either disposing of overseas assets to overseas investors or by accruing liabilities with the rest of the world. The UK has run an annual current account deficit since 1984.

Figure 10 shows there was a net inflow of £48.1 billion (1.8% of GDP) in 2023, following financial inflows of £325.0 billion (11.9% of GDP) and financial outflows of £276.9 billion (10.2% of GDP).

For UK assets (outflow), this was most noticeable in portfolio investment, which increased from a deficit of £68.9 billion in 2022 to a surplus of £252.5 billion in 2023. This was largely caused by increased equity and investment fund shares. Direct investments fell overall. However, there was an increase in equity capital other than reinvestment of earnings, which switched from a deficit of £12.7 billion in 2022 to a surplus of £19.5 billion in 2023. Other investment abroad also brought down the overall outflow with a fall of £126.5 billion between 2022 and 2023.

For UK liabilities (inflow), the most noticeable increase was in other investment in the UK, which increased from £145.3 billion in 2022 to £327.2 billion in 2023. Portfolio investment also increased as non-residents increased their holdings of debt securities. This was partially offset by a fall in direct investment in the UK.

Information on the financial account can be found in our 07 Financial account, The Pink Book dataset.

The international investment position (IIP) measures the stock of assets and liabilities at the end of a period. For annual estimates, this period is 31 December. The IIP is the sum of the opening balance, financial flows, and other changes, such as price and currency changes.

If all else remained the same, the widening in the current account deficit would be expected to lead to a fall in the net IIP. This would happen when an economy either incurred net financial liabilities or sold existing assets to finance its net borrowing from the rest of the world. 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 our 08 International investment position, The Pink Book dataset.

UK international investment position (IIP) assets and liabilities 2023

Notes:

1. This experimental map includes the UK’s largest counterpart countries.
2. Investment data for 2022 does not include annual benchmark.
3. Historical data can be found in our 10 Geographical breakdown of the UK international investment position, The Pink Book dataset.

The preliminary estimate of the IIP net liability position was £658.2 billion, or 24.2% of gross domestic product (GDP), at the end of 2023. This was up from £298.1 billion (11.8% of GDP) at the end of 2022. This was largely because of other investment, which switched from a net asset position of £340.5 billion in 2022 to a net liability position of £14.2 billion in 2023. Net direct investment also decreased by £158.8 billion in 2023. However, this was more than offset by a narrowing of £166.6 billion in the net portfolio liability position.

Foreign direct investment statistics have changed from 2020 onwards. 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. Because we have temporarily paused full processing of Foreign Direct Investment (FDI) survey data, recent FDI-related estimates are subject to more uncertainty than usual. IIP estimates for 2023 are based on quarterly survey data with simpler processing than normal, and 2022 estimates are based on quarterly survey data, rather than annual. Therefore, users should be cautious when interpreting recent FDI data in the balance of payments statistics.

The remainder of this section refers to investments that include 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 causing 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 but not the underlying volume.

The value of UK assets, excluding derivatives and reserve assets, increased by £23.1 billion between 2022 and 2023. The value of UK liabilities, excluding derivatives and special drawing rights, increased by £374.5 billion between 2022 and 2023. Therefore, the net position, excluding derivatives, special drawing rights and reserve assets, decreased for a seventh consecutive year to a net liability of £682.1 billion (25.1% of GDP) in 2023.

There were increases in all UK liabilities to foreign investors between 2022 and 2023; portfolio investment increased by £177.8 billion, direct investment increased by £138.7 billion, and other investment increased by £53.5 billion.

Both assets and liabilities experienced decreased currency revaluations, by £469.0 billion and £271.1 billion, respectively. These partly reversed the large increases seen in 2022, which had the highest currency revaluations since 2016. This was because the British pound devalued against the US dollar over the year to the end of 2022.

For both assets and liabilities, these currency revaluations were more than offset by rises in flows and prices changes. Other changes narrowed the overall change in assets and widened the overall change in liabilities.

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

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

In some years, methodological and data source improvements are incorporated into the Pink Book. The most recent were applied in 2023. They are presented in our Detailed assessment of changes to balance of payments annual estimates: 1997 to 2021 article.

Changes affecting UK trade statistics

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

HMRC implemented some data collection changes after 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.

Developing foreign direct investment 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. We advise caution when comparing 2020 onwards with previous years.

Production of estimates from the FDI survey was temporarily paused at the end of 2023. This allowed 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, from Quarter 3 (July to Sept) 2023 onwards, the direct investment estimates used in this bulletin are based on simpler processing of survey data than normal. Therefore, users should be cautious when interpreting FDI estimates for 2023. We aim to incorporate 2023 estimates based on full processing into the national accounts at the end of 2024.

On 8 October 2024, we published annual FDI estimates for 2022 in our Foreign direct investment involving UK companies: 2022 bulletin. However, the 2021 and 2022 estimates based on this latest annual data are not yet reflected in the national accounts. In line with our revision policy for the UK national accounts, this will be the case until Pink Book 2025. We have produced some indicative asset and liability statistics based on the annual FDI survey results to show how these results compare with estimates based on the quarterly survey that are already published and included in this bulletin. These are only indicative; the final estimates could be revised from benchmarking, from updated survey information for 2022, or from updated non-FDI survey sources of information, for example.

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.