United Kingdom Current Account

The Current Account reflects the balance of transactions between UK residents and the rest of the world. It is the sum of net trade balance (the difference between exported and imported goods and services), the net factor income of UK residents (such as interest, dividends, etc.) and net transfer payments (e.g. foreign donations) to UK residents.

In other words, the current account includes operations between UK residents and non-residents in relation to goods, services, primary (investment) and secondary (transaction) income.

The value includes three major components: goods and services, income (wages and earnings on investments) and current transfers. The balance of goods and services is calculated based on exports and imports. The balance of income includes wages and earnings on foreign investments (minus payments made to non-resident investors). Current transfers mean transfer of money between residents and non-residents; these transfers are not related to the above-mentioned components and may include donations, aids, private money transfers, pension payments, alimony, etc.

A positive current account balance indicates that the country is a net lender to the rest of the world. A negative value shows that the nation is a net borrower.

The impact of the indicator on the pound sterling may vary depending on current economic conditions. Most often the growth of the current account is seen as positive for the GBP.