Missing billions halve Britain's trading deficit

Britain's balance of payments was in the red last year by less than half as much as first estimated. Revised figures yesterday showed a shortfall of pounds 2.9bn, compared with the first estimate of pounds 6.7bn, thanks to the discovery of billions of pounds worth of extra income from UK investments overseas.

The balance improved further in the first quarter of this year, mainly due to a fall in Britain's payments to the EU from their abnormally high level in the last three months of 1995. The deficit fell by pounds 151m to below pounds 1.1bn.

The breathtaking scale of the statisticians' improvements to last year's figures helped push sterling half a pfennig higher against the mark. It closed at DM2.35.

Simon Briscoe, UK economist at Nikko Europe, said: ''This news pushes any worries about the trade account beyond the horizon of the election."

According to the new figures, Britain's net investment income reached a record pounds 9.6bn in 1995, and improved by pounds 200m to pounds 2.9bn in the first quarter of 1996. Official statisticians and the Bank of England will be investigating the scale of revisions to the figures, which are drawn from a banks' survey.

City analysts were wary about the good news. "There is no guarantee these figures will prove any more definitive than the last," Ian Shepherdson at HSBC Markets said. However, investment income was clearly on an upward trend. In addition, the net amount of transfers overseas - dominated by British payments to the EU - retreated from its unusually high level of pounds 2.1bn at the end of last year to pounds 1.4bn.

These two improvements made up for a disappointing decline in the surplus on trade in services. It slipped to pounds 910m in January-March from pounds 1.4bn in the fourth quarter of 1995.

Two trends accounted for this. There was a small fall in the balance earned by financial services and a deterioration in travel. There was an increase in trips abroad by both personal and business travellers.

Trade in goods slipped further into the red, reaching pounds 3.53bn.

Separate figures yesterday showed that the economy grew 0.4 per cent in the first quarter, the same as the original estimate.

But the year-on-year growth rate was revised down to 1.9 per cent because of a small rise in the figure for GDP in the first quarter of 1995.

The Office for National Statistics also reported a different mix of growth compared with the previous estimates. It revised up consumer spending growth to 0.9 from 0.8 per cent, leaving it the biggest quarterly increase since the end of 1993. The explanation was revealed by growth in real personal disposable income, or after-tax income adjusted for inflation. It was up a robust 4 per cent in the year to the first quarter.

Investment was also upgraded, rising 1.5 per cent rather than 0.7 per cent.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us