Part A: UK current account

Chart A.7 The UK current account deficit is high by historical and international standards Sources: ONS and Bank calculations. (a) Primary income mainly consists of compensation of employees and net investment income. Secondary income consists of transfers. Decomposition of the UK current account (a)

Chart A.8 Depressed mining and quarrying income is one factor weighing on UK FDI earnings Sources: ONS and Bank calculations. (a)The total is taken from latest ONS series published on 30 June The industrial split is based on data published alongside ONS article, ‘An analysis of the drivers behind the fall in direct investment earnings and their impact on the UK’s current account deficit’, March Nominal earnings on outward FDI (a)

Chart A.9 Purchases of UK equities by foreign investors appear to have fallen in the run-up to the EU referendum Sources: S&P Global Market Intelligence and Bank calculations. (a)Quarterly net changes in non-resident holdings of FTSE 100 companies’ shares, as listed on the index at 23 June (b)The change in the holding of shares are weighted at each quarterly period by the price of the underlying stock. These data are updated on the date in which a change in shareholding is formally registered, not the date when the transaction itself takes place, which may be earlier. Data are non seasonally adjusted. (c)The S&P’s disclaimer of liability, which applies to the data provided, is available at Changes in non-resident net holdings of FTSE 100 shares (a)(b)(c)

Table A.1 FDI and portfolio investment flows have been the main sources of inward investment since 2011 Sources: ONS and Bank calculations. (a)This is the change in UK foreign liabilities, less the change in UK foreign assets, for each category of investment. The total net inward financing flow is equal in magnitude to the current account deficit (plus net errors and omissions). (b)‘Portfolio investment’ consists of debt securities (including government debt), equities and investment fund shares. (c)‘Other investment’ consists mostly of loans and deposits. (d)The sum of the components may not equal the total, as financing flows for reserves and net derivatives are excluded.. Financing flows behind the current account deficit

Chart A.10 The United Kingdom’s external liabilities as a share of GDP have fallen since the financial crisis Sources: ONS and Bank calculations. (a) Derivatives are excluded. UK gross external liabilities by type (a)

Chart A.11 The United Kingdom’s net foreign asset position has been improving Sources: ONS and Bank calculations. (a)The UK NIIP measures the difference between the United Kingdom’s external assets and external liabilities. Data are non seasonally adjusted. (b)Estimates of the United Kingdom’s NIIP are uncertain. The estimate published by the ONS does not incorporate revaluation effects on the foreign direct investment (FDI) assets and liabilities. According to Bank calculations, updating the book value of FDI suggests that the United Kingdom’s NIIP may be large and positive. For further details see the May 2014 Inflation Report, pages 22–23; The United Kingdom’s net international investment position (NIIP) (a)(b)