The UK Non-oil Trade Balance and External Adjustment

Between 1980 and 1986 the UK current account balance was in continual surplus, with an average excess of exports over imports of some £3.4 bn per annum. This situation was reversed with a vengeance in the years 1987–9 when the average annual deficit on current account was recorded at about £12.7 bn. The cumulated current account balance over the decade as a whole amounts to a deficit of over £15 bn, which crudely represents the extent of new net UK borrowing from overseas. Moreover this dramatic deterioration in the current account position occurred concurrently with a strong invisibles surplus (average £6.8 bn per annum, between 1987 and 1989, inclusive), by definition implying that any external balance problem lay in the non-oil trade balance account. 1 These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.