The UK exports and imports billions of pounds worth of goods and services. Find the latest data on UK trade and the current account.

The UK exports and imports billions of pounds worth of goods and services. Find the latest data on UK trade and the current account.

The UK’s trading relationship with the EU changed fundamentally following Brexit. This briefing provides statistics on UK trade with the EU over recent years.

The UK’s trading relationship with the EU changed fundamentally following Brexit. This briefing provides statistics on UK trade with the EU over recent years.

To ask His Majesty's Government what consideration they have given to establishing a unit to promote import substitution; and what assessment they have made of the potential for such a unit to improve the UK's balance of payments.

To ask His Majesty's Government what consideration they have given to establishing a unit to promote import substitution; and what assessment they have made of the potential for such a unit to improve the UK's balance of payments.

To ask the Secretary of State for Energy Security and Net Zero, whether he has made an assessment of the potential impact of replacing domestically refined oil with imported oil at Grangemouth on the UK's balance of payments.

To ask the Secretary of State for Energy Security and Net Zero, whether he has made an assessment of the potential impact of replacing domestically refined oil with imported oil at Grangemouth on the UK's balance of payments.

To ask the Secretary of State for International Trade, what steps she is taking to improve the balance of payments between the UK and the Republic of Ireland.

To ask the Secretary of State for International Trade, what steps she is taking to improve the balance of payments between the UK and the Republic of Ireland.

To ask the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, what assessment he has made of the net effect of import and export of UK coal on the balance of payments in (a) each of the last five years (b) annually with individual countries.

To ask the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, what assessment he has made of the net effect of import and export of UK coal on the balance of payments in (a) each of the last five years (b) annually with individual countries.

To ask the Minister for the Cabinet Office, what recent representations he has received from representatives of UK businesses on the effect on the UK’s balance of payments of the UK's ongoing negotiations with the EU.

To ask the Minister for the Cabinet Office, what recent representations he has received from representatives of UK businesses on the effect on the UK’s balance of payments of the UK's ongoing negotiations with the EU.

To ask Her Majesty's Government what assessment they have made of the impact of the COVID-19 pandemic on the UK's balance of payments.

To ask Her Majesty's Government what assessment they have made of the impact of the COVID-19 pandemic on the UK's balance of payments.

To ask Mr Chancellor of the Exchequer, what steps he is taking to reduce the balance of payments deficit; and if he will make a statement.

To ask Mr Chancellor of the Exchequer, what steps he is taking to reduce the balance of payments deficit; and if he will make a statement.

As I am sure the hon. Gentleman will know, the short-run effect of a depreciation in sterling would be expected to be a decline in our trade balance performance as we suck in more expensive imports, in sterling terms. But over time the economy will adjust—there are signs that this is happening now—with exporters increasing their output to take advantage of weaker sterling and their greater competitiveness in international markets, and indeed not just exporters, but those who would substitute imported products with domestically produced products, which is often the best way forward for smaller companies.

As I am sure the hon. Gentleman will know, the short-run effect of a depreciation in sterling would be expected to be a decline in our trade balance performance as we suck in more expensive imports, in sterling terms. But over time the economy will adjust—there are signs that this is happening now—with exporters increasing their output to take advantage of weaker sterling and their greater competitiveness in international markets, and indeed not just exporters, but those who would substitute imported products with domestically produced products, which is often the best way forward for smaller companies.

Much of the growth is due to the fact that we are spending more on imports, due to the low cost of the pound. The latest figures from the Office for National Statistics reveal that our trade in goods deficit has risen by £2.6 billion over the past quarter and now stands at a staggering £34.4 billion. Does not the extra cost of imports have an impact on the cost of our exports and affect our productivity?

Much of the growth is due to the fact that we are spending more on imports, due to the low cost of the pound. The latest figures from the Office for National Statistics reveal that our trade in goods deficit has risen by £2.6 billion over the past quarter and now stands at a staggering £34.4 billion. Does not the extra cost of imports have an impact on the cost of our exports and affect our productivity?

To ask the Secretary of State for International Trade, how the Government plans to ensure that the North East retains its balance of payment surplus after the UK leaves the EU.

To ask the Secretary of State for International Trade, how the Government plans to ensure that the North East retains its balance of payment surplus after the UK leaves the EU.

To ask Her Majesty’s Government what steps they are taking to reduce the United Kingdom’s deficit on the balance of payments in overseas trade.

To ask Her Majesty’s Government what steps they are taking to reduce the United Kingdom’s deficit on the balance of payments in overseas trade.

My Lords, changes in investment income are driving the UK’s current account deficit. This has greatly reflected Britain’s attractiveness as a destination for investors. In 2014-15, UKTI provided support for 1,610 of the 1,988 FDI projects in the UK. Government efforts are continuing to help reach the Government’s £1.5 trillion target by 2020. However, the Government’s commitment to eliminating the budget deficit should help to narrow the current account deficit, as forecast by the OBR.

My Lords, changes in investment income are driving the UK’s current account deficit. This has greatly reflected Britain’s attractiveness as a destination for investors. In 2014-15, UKTI provided support for 1,610 of the 1,988 FDI projects in the UK. Government efforts are continuing to help reach the Government’s £1.5 trillion target by 2020. However, the Government’s commitment to eliminating the budget deficit should help to narrow the current account deficit, as forecast by the OBR.

I thank the Minister for that reply, which of course is entirely consistent with government policy over the last five years—funding the deficit by inward investment—but the problem is that it is not working. The current account deficit has become larger in each of the last five years and now stands at a record level of 7% of GDP. Are the Government going to continue with this failed policy or are they going to change it before the deficit becomes unsustainable?

I thank the Minister for that reply, which of course is entirely consistent with government policy over the last five years—funding the deficit by inward investment—but the problem is that it is not working. The current account deficit has become larger in each of the last five years and now stands at a record level of 7% of GDP. Are the Government going to continue with this failed policy or are they going to change it before the deficit becomes unsustainable?

My Lords, I emphasise, as I tried to do in my opening comments, that the current account deterioration is not being driven by a deterioration in the trade deficit. In fact, our trade deficit has been relatively stable at around 2% of GDP for the last seven years.

My Lords, I emphasise, as I tried to do in my opening comments, that the current account deterioration is not being driven by a deterioration in the trade deficit. In fact, our trade deficit has been relatively stable at around 2% of GDP for the last seven years.

My Lords, the Minister is right to say that the deficit is caused by the imbalance in FDI. Does he agree that the way to address this is to encourage industry to divert investments away from low-yield FDI into high-yield areas, such as China, which currently represents less than 1% of our overseas investments abroad?

My Lords, the Minister is right to say that the deficit is caused by the imbalance in FDI. Does he agree that the way to address this is to encourage industry to divert investments away from low-yield FDI into high-yield areas, such as China, which currently represents less than 1% of our overseas investments abroad?

I am very grateful for the accurate suggestion by my noble friend Lord Leigh as to what is really going on below the data. I emphasise—as, rather generously, Ernst & Young did yesterday in a very important report—that the recent deterioration is

due to the growing attractiveness of the United Kingdom, especially areas outside London, in the minds of investors all over the world. Narrowing this deficit requires us to invest more in other places in the world that give a higher return.

I am very grateful for the accurate suggestion by my noble friend Lord Leigh as to what is really going on below the data. I emphasise—as, rather generously, Ernst & Young did yesterday in a very important report—that the recent deterioration is

due to the growing attractiveness of the United Kingdom, especially areas outside London, in the minds of investors all over the world. Narrowing this deficit requires us to invest more in other places in the world that give a higher return.

I wonder whether the Minister has seen today’s FT interview with the director-general of the WTO, in which he explains that, if we were to leave the EU, the UK would be required to put tariffs on imports from all 58 countries with which the EU has trade arrangements, and they in turn would be required to put a surcharge on UK exports. This is not an area where we will have a choice. We cannot say, “We’re not charging duties here”. That would be impossible and illegal. Hence, would the Minister recommend that Brexiters take note of the damage they could cause?

I wonder whether the Minister has seen today’s FT interview with the director-general of the WTO, in which he explains that, if we were to leave the EU, the UK would be required to put tariffs on imports from all 58 countries with which the EU has trade arrangements, and they in turn would be required to put a surcharge on UK exports. This is not an area where we will have a choice. We cannot say, “We’re not charging duties here”. That would be impossible and illegal. Hence, would the Minister recommend that Brexiters take note of the damage they could cause?