Current Account

The Current Account is the headline balance in the UK balance of payments, ONS statistics on UK dealings with the rest of the world. ONS (Office for National Statistics) publishes it quarterly from 1955, using the IMF (International Monetary Fund) BPM6 global rulebook adopted in 2014. It covers UK residents (UK based people and firms) trading with non residents (outsiders), excluding the Channel Islands and Isle of Man. It blends many surveys with tax and banking data, and it is not the budget gap (government borrowing balance), trade alone, or wealth stock (IIP).

ONS releases each quarter about 90 days after quarter end, at 0700 UK time, on the same day as GDP (total output) quarterly national accounts. Each release adds full tables for goods, services, primary and secondary income, capital, financial, IIP (wealth stock list), and revisions, as CSV and XLSX. Pink Book (yearly volume) in July or October adds surveys and method changes, dates are fixed 12 months ahead, and new quarters stay provisional. Revisions follow set revision rules, a surplus means credits beat debits, a deficit means debits beat credits, with no target or buy or sell signal.

Three accounts add up to the balance, so weakness in any one of them can pull the whole result into deficit.

• Trade in goods and services: exports minus imports, where large gold flows can swing the headline.
• Primary income: earnings on direct and portfolio investments abroad plus cross border pay.
• Secondary income: current transfers such as official payments to and receipts from EU and global bodies.

In the quarter ending 31 December 2015 the deficit reached 32700, or 7.0% of GDP, the largest share since 1955. It was up from 20100 in the quarter ending 30 September 2015. Trade gap grew to 12200 from 8900 as goods exports fell 900, services exports fell 500, goods imports rose 600 and services imports rose 1300. Primary income gap grew to 13100 from 5800 on weaker overseas investment returns, secondary gap grew to 7400 from 5400, and finance inflow was 22300.

Investment earnings drove the record more than trade, so goods watchers missed the push, while the inflow funded the gap. The full-year deficit was 96200, or 5.2% of GDP, the largest annual share since 1948.

1. Double entry: record each UK deal with outsiders twice, as a credit (value given) and a debit (value received).
2. Component balances: for each part, balance equals credits minus debits, so trade, primary and secondary each give a surplus or a gap.
3. Current account sum: add the 3 parts, so CA = TB + PI + SI, where each term is credits minus debits. For example, 12200 plus 13100 plus 7400 equals a 32700 deficit.
4. Surplus or deficit: credits above debits means surplus, debits above credits means deficit.
5. Funding link: current plus capital (one off transfers) equals financial (funding flows), or CA + KA = FA. A joint gap means the UK is a net borrower, funded from abroad.
6. Seasonal adjustment: headline current and capital remove calendar swings, while financial and IIP (wealth stock list) stay unadjusted.