UK Reaches Record in Earnings From International Services Activities in 2000
Jun 16, 2001

UK Reaches Record in Earnings From International Services Activities in 2000 The United Kingdom registered record high in earnings of £234bn in 2000 compared to the £195bn generated in 1999 from international services transactions. Exports of services reached £67bn and income from overseas assets totaled £146bn, which added together with overseas transfers of £21bn, explain the high earnings of 2000 according to the latest Trade Report by International Financial Services of London (IFSL).

The UK surplus on invisibles continued to shrink after the record £20.5bn surplus registered in 1998, due smaller surplus on investment income and trade in services that were only partly offset by a smaller deficit on transfers.

The UK current account presented a £16bn deficit in 2000 after the goods balance deteriorated further to reach a record £28.8bn deficit in 2000.

The UK has moved into a surplus on invisibles trade with EU countries that has contributed to a recovery in the current account balance with these countries. Last year, the current account deficit with EU countries was £1.7bn. The UK’s invisible trade with other regions usually shows a surplus.

For the first time in the last decade foreign companies exhibited higher rates of return on their UK investments than the returns enjoyed by UK companies overseas. The rate of return for affiliates of foreign companies was 11.3% while that of overseas affiliates of UK companies was 9.8%. This change can be explained by deterioration of returns to investments abroad on private non-financial corporations. The bulk of UK investment on these industries was through mergers and acquisitions that reached a record £595bn in 2000 compared to £121bn a decade ago.

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