United Kingdom Current Account2021 Data | 2022 Forecast | 1946-2020 Historical

The current account deficit in the UK unexpectedly narrowed to GBP 8.6 billion or 1.5% of the GDP in the June quarter of 2021 from a downwardly revised GBP 8.8 billion in the previous period and compared to market forecasts of GBP 15.6 billion. Total trade saw a GBP 0.7 billion surplus, switching from a GBP 4.1 billion deficit, as exports rose faster than imports, as the global economic recovery advanced at full steam amid quicker vaccination drives.The primary income deficit widened sharply to GBP 5.5 billion from GBP 1.1 billion, due to a decrease in UK residents’ investments abroad. The secondary income deficit narrowed slightly to GBP 3.8 billion from GBP 3.6 billion, even as gross national income-based payments to the EU resumed under the withdrawal agreement with effect from the second quarter of 2021.

The current account deficit in the UK narrowed to GBP 12.8 billion or 2.3% of the GDP in the first quarter of 2021 from GBP 26.3 billion in the previous period and compared to market forecasts of GBP 13.3 billion. The trade in goods deficit narrowed as both imports and exports fell significantly 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 lockdown. Both primary income credits and debits have improved, leading to the deficit widening as earnings increased more for non-residents on their UK investments than UK residents’ investments abroad. The secondary income deficit narrowed, reflecting the ending of the UK’s regular (VAT) and gross national income-based payments to and receipts from the EU as the UK reached the end of the withdrawal transition period.

The current account gap in the UK rose to GBP 26.3 billion in the fourth quarter of 2020 from a downwardly revised GBP 14.3 billion in Q3 and less than market forecasts of a GBP 33 billion shortfall. It was the widest current account gap since Q1 2019 and equivalent to 4.8% of the GDP. The total trade deficit widened (GBP -13.2 billion vs GBP -3.9 billion) as demand for goods imports continued to recover at a faster rate than exports following their sharp contraction in Q2 2020 when global trade stalled under strict restrictions to curb the global pandemic; trade in services exports and imports continue to be impacted, specifically in transport and travel services. Meanwhile, the primary income deficit narrowed slightly (GBP 5.0 billion vs GBP 5.3 billion) mainly because of a slightly larger recovery in UK earnings on foreign investments than the recovery in payments to foreign investors on their UK investments. Still, the secondary income gap rose (GBP -8.1 billion vs GBP -5 billion).