Balance of trade improves, government gives more money to foreigners

The balance of payments figures for the second quarter sum up the UK problem on the balance of payments. The deficit widened by £1.9bn from additional sums the government sent abroad, and from  a £1.4bn deterioration in the net figure for interest and dividends. As we sell more and more of our assets to overseas buyers so more rewards will be sent out to foreign investors.  On trade account we saw a £2,4bn improvement, with a £2.3bn improvement in the export of goods.

Inward investment remains very strong, at a net £11.7bn. This means we should expect further deterioration in the flows of interest and  dividends in the years ahead. The UK government could improve the  balance of payments by simply refusing to send the EU any more money after March 2019, which would be great news.

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55 Comments

  1. Javk swelke
    Posted September 29, 2017 at 2:28 pm | Permalink

    Yeah po head and what then? The cliff edge is waiting..is that what you’re saying you want for the british people and the british economy? walk away in march 2019? And I thought you were some kind of enlightened genius considering you have a gig with the financial times and all..

    It is this awful attitude that has us in the place we’re in..i can tell you that Junker will only be rubbing his hands with glee..verhofstadt will do a jig and Barnier will close up shop..the lights will go out in the channel ports and long queues of weary people will form up in the departures and arrivals hoping to get through maybe today maybe tomorrow..idiot..and you think it can all be sorted out by WHO rules..idiot

    • Bryan Harris
      Posted September 29, 2017 at 3:17 pm | Permalink

      There go the words of a UK backstabbing, EU lover

      • hans christian ivers
        Posted September 29, 2017 at 4:41 pm | Permalink

        Bryan,

        your high academic level of argumentation is impressive, keep it up , please, very useful

        • Hope
          Posted September 29, 2017 at 9:07 pm | Permalink

          In a complete U-turn, Brexit Secretary David Davis admitted EU citizens living in Britain will be able to appeal to UK courts using European law, which will override British law.

          During his closing remarks at the fourth round of negotiations in Brussels, Mr Davis said: “The United Kingdom has committed to incorporating the final withdrawal agreement fully into UK law.

          He confessed the law would have a “direct effect” when it came to defending the rights of 3.5 million EU citizens in Britain.
          JR, is thnot s correct? If so your govt sold the U.K. Out. We did not vote for this by any stretch of the imagination. Our courts our laws for everyone here. How about other nationals do our courts uphold for their courts and laws as well! Utterly disgraceful. Election now please. Your party should not be in govt.

        • Bryan Harris
          Posted September 30, 2017 at 6:17 am | Permalink

          I haven’t seen anything useful or interesting from you – are you another troll

        • libertarian
          Posted September 30, 2017 at 7:55 pm | Permalink

          hans christian ivers

          what you want a reason argument based on long experience of trading goods and services internationally like our friend Javk ?

          Please…. You two haven got a clue… no skin in the game, no experience and no idea

      • James Matthews
        Posted September 29, 2017 at 5:14 pm | Permalink

        And not a very bright one.

      • hefnerRIP
        Posted September 29, 2017 at 5:58 pm | Permalink

        Sorry, but JR has, in the past, said that the fact of previously British companies being now in the hands of foreigners is not a problem as long as the employment of British workers is/was guaranteed.

        • David Price
          Posted September 30, 2017 at 4:46 am | Permalink

          What has this to do with the demented comment from the OP?

          Although, are you criticising our host for not being hide-bound?

        • libertarian
          Posted September 30, 2017 at 7:57 pm | Permalink

          hefnerRIP ( brain dead?)

          What has that got to do with the post? When will you socialist thickos finally realise publicly traded ( shareholder owned) businesses dont have nationalities …. oh dear oh dear

          • hefner
            Posted October 1, 2017 at 12:23 pm | Permalink

            Thank you for reminding me, but that’s why I moved most of my (socialist?) portfolio from UK companies to global ones which allowed to compensate and more for the sterling fall.
            But I am always happy to receive good advices.

    • Superb Person
      Posted September 29, 2017 at 4:06 pm | Permalink

      The cliff edge. It does not exist. It was good propaganda. Who started it? Was it an ex-politician..a LibDem..lied about tuition fees? Someone who has read an introduction to semiotics at Uni? Why not an Arid Desert, or a Black Pit or Depths of Deep Space in a Remoaner’s cerebral complex?

      • Superb Person
        Posted September 29, 2017 at 4:23 pm | Permalink

        or cerebral cortex…just testing you!

    • ian wragg
      Posted September 29, 2017 at 4:39 pm | Permalink

      Brussels troll, they’re coming thick and fast now that freedom days gets nearer.
      The posts will become increasingly shrill and deluded.
      I note the BBC mentioned that Brexit could be positive for British fisherman. Some editor is in for a spanking.

  2. Bryan Harris
    Posted September 29, 2017 at 3:21 pm | Permalink

    The UK government could improve the balance of payments by simply refusing to send the EU any more money after March 2019, which would be great news.

    Considering the pathetic EU response to Ms Mays speech, I hope – nay, expect, that is what she has in mind when talks stall completely.
    If this were to happen, JR – would she carry the government with her?

  3. DaveM
    Posted September 29, 2017 at 3:24 pm | Permalink

    “…refusing to send the EU any more money…etc”

    Well that is what 17.4 million people voted for. But you and your party are still holding the country captive with your dead duck of an utterly weak and useless prime minister because party loyalty is more important to you than the people who elect you.

    • The Prangwizard
      Posted September 29, 2017 at 6:49 pm | Permalink

      Hear, hear. We must keep saying this, loudly and often. May must go.

      • zorro
        Posted September 29, 2017 at 7:52 pm | Permalink

        Indeed, I saw thta she was dithering at the back of the EU leaders procession today. Why bother with this humiliation? If only we had someone confident who would refuse to be put upon by EU crats…. We are constantly let down by the Tory party!

        zorro

  4. Caterpillar
    Posted September 29, 2017 at 3:43 pm | Permalink

    The result of inward investment will also depend on whether it leads to import substitution and exports. If the investment is in U.K. assets that are already producing U.K. consumed goods and services then the concern on outflow of income is valid. On the balance of income, the future will also depend on U.K. Investment abroad, as we know much of this has been in natural resources such as hydrocarbons, but if these reduce in profitability then the income balance will go down.

  5. A real guy!
    Posted September 29, 2017 at 4:35 pm | Permalink

    Why does every UK Prime Minister go everywhere on earth with their tails between their legs? Cameron went to see Obama after the BP spillage and as a prologue ( whimper ) said that “it does not make sense to sink a company …we have pensioners..who depend on it..better surely for the company to continue” Then afterwards with Obama he said (whimper )” We are a partner ( whimper with toddler screwed up blabbing face ) a JUNIOR one it must be said in global defence …(bent back, ever so humble stoop Mr Obama, Sir, grovel ) ”
    So Mrs May queues up to meet Mr Barnier. Who IS he anyway?..to see what the menu is for discussions, how they should unfold and when she must take her hands off her head and show to Mr Barnier a clean handkerchief and freshly washed hands. She should stick her heel in his foot and shout Ohhhh DOOO forgive me!!!! They don’t build women in our country like they used to.

  6. hans christian ivers
    Posted September 29, 2017 at 4:38 pm | Permalink

    John,

    the difference is so small that in the scheme of things it is penauts, we need to make our own products and services more competitive, so we are able through higher productivity and competitiveness to make a permanent improvement in our trade deficit.

    Why are you coming up with such short term instead of long term sustainable solutions, when the government has already committed to pay beyond March 2019, is that being realistic?

    • David Price
      Posted September 30, 2017 at 4:43 am | Permalink

      It would seem you miss the points;

      You don’t improve your competitiveness if your means to compete effectively keeps being sold off or given away. Why should I seek to increase productivity if all the intellectual and financial fruits of that activity go elsewhere via foreign ownership and transfer pricing.

      The core issue is not the amount involved but the attitude behind it being transferred and the opportunity costs.

      • hans christian ivers
        Posted September 30, 2017 at 10:31 am | Permalink

        I did not miss the point as the majority of businesses bought by foreign investors actually have significant investments made in them once thay have been acquired, enabling the Treasure t make money on the investments as well.

        I did not miss anything on this one

        • David Price
          Posted October 2, 2017 at 5:46 am | Permalink

          Your statement was “we need to make our own products and services more competitive”, that does not relate to ” .. as the majority of businesses bought by foreign investors …”

          The issue is that a number companies acquired by foreign investment are stripped of IP assets, have production and operations relocated to other countries and revenues are relocated for tax purposes via transfer pricing. Being more competitive does not prevent these kind of action if the attitudes are against maintaining the capabilities here.

          Where is your evidence that “.. the majority of businesses bought by foreign investors actually have significant investments made in them once thay have been acquired, enabling the Treasure to make money on the investments as well.

          Cadburys is a clear counter example and the picture is not yet clear on ARM. Imagination dividions are being bought by a foreign company, are you telling me that it’s IP won’t move? I worked in a large tech company that was acquired and it’s IP and revenues enjoyed transfer pricing.

  7. Lifelogic
    Posted September 29, 2017 at 4:49 pm | Permalink

    It would indeed be great news, but alas we have socialist ex(?) remainer Theresa May- at least she backed UBER. She is usually attacking and over regulating the gig economy. Also instructing lefty dopes like Mathew Taylor to write daft reports. Also she is wrong on almost everything else so I thought that she might well not do.

    Banning UBER for essentially trumped up “safely” reasons is a huge over reaction and clearly makes things far less safe for people as walking is about 20 times more dangerous than being driven – as is standing around trying to hail an over priced black cab. A cab many cannot afford anyway.

  8. alan jutson
    Posted September 29, 2017 at 4:54 pm | Permalink

    Yes JR we are being taken as mugs again with foreign ownership growing of anything that is either profitable, subsidised by the taxpayer (Government) or overloaded with Government contracts.

    Once again short term thinking with some of our most basic services.

  9. acorn
    Posted September 29, 2017 at 4:57 pm | Permalink

    Also published today: Quarterly sector accounts: April to June 2017 https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/quarterlysectoraccounts/apriltojune2017

    Look at section 3 particularly. Sector net lending, a positive value on figure 1, means that sector is running a surplus, its income is greater than its expenditure. Sector net borrowing means it is running a deficit, income is less than expenditure.

    The government sector is running a deficit – it is not borrowing from anybody, it issues its own monopoly currency and sucks it all back eventually, with taxes, when people stop saving it and start spending it. The government deficit is getting smaller by the quarter, this is “austerity” writ large on one chart.

    In this quarter, basically, every other domestic sector is running a deficit to pay the rest of the world (RoW) 23.7 billion Pounds Sterling which RoW has to find something to do with them. Less than 10% of that is to the EU club fees.

    Let’s hope the RoW keeps finding Pound Sterling denominated assets they want to buy and save for ever.

  10. Lifelogic
    Posted September 29, 2017 at 5:06 pm | Permalink

    We must sell capitalism to the under 40s says Theresa. So why exactly is she pushing her half witted interventionist agenda, wages controls, price controls, gender pay drivel, the dire virtual state monopolies (health and planning), enforced pensions, restrictive planning, more employee “rights”, apprenticeship taxes, endless tax increases, the expensive religious energy agenda and the rest of her daft misguided socialist lunacies?

    Meanwhile the Standard says house prices have fallen (mainly in London) and almost entirely due to the absurd (up to 15%) stamp duty that Osborne (the editor) introduced. Retained by the absurd Philip Hammond. A tax essentially on Londoners and the South East.

  11. Peter VAN LEEUWEN
    Posted September 29, 2017 at 5:26 pm | Permalink

    The UK government (united I’m told by the crowd on this site) is now requesting a two year implementation period during which it would continue to pay up, provided a good deal will be around the corner (nothing agreed until all will be agreed). I could very well see an agreement for a longer implementation period in a few years, because a bespoke deal for the UK will be complicated and will take time.
    “refusing to send the EU any more money after March 2019” is not a Tory policy and extremely unlikely!

    • Anonymous
      Posted September 29, 2017 at 8:26 pm | Permalink

      Does anyone remember the friendly Peter VAN LEEUWEN who used to frequent these pages ?

      The Tories delivered a Remain PM, a Remain Chancellor and a Remain Home Secretary.

      The Civil Service is staunchly Remain too.

      A good second to Brexit will be to see the establishment openly defy the referendum result – as has happened throughout the EU.

      Why do we pretend to have democracy in the EU Peter ?

      Don’t you think the British public have done the EU a service ? It can get to where it wants faster.

      • Mitchel
        Posted September 30, 2017 at 11:18 am | Permalink

        Not without our funding it won’t!

  12. Tabulazero
    Posted September 29, 2017 at 5:28 pm | Permalink

    It would also mean that you would not get access to the Single-Market which is not exactly great news for the UK’s economy. It would be bad for the EU of course but far more survivable.

    As time passes, you are slowly but surely being herded toward a Norway option by the combined forces of your Civil Service, the City and the CBI.

    When are you planing to roll out the “we’ve been stabbed in the back by the Remoaners” argument, Mr Redwood ?

    • zorro
      Posted September 29, 2017 at 7:58 pm | Permalink

      So planning a continental wide blockade are you banning trade? Nice, is that your commitment to A8 TEU?

      zorro

    • Edward2
      Posted September 29, 2017 at 11:49 pm | Permalink

      Access is a legal requirement under WTO rules.
      That’s why so many nations trade happily with Europe without agreeing to freedom of movement nor supremacy of EU courts nor being members of the Single Market

  13. ian
    Posted September 29, 2017 at 5:30 pm | Permalink

    DD cave in to EU on eu citizens right to come under ECJ in uk courts, it go to show that you do not have a country any more and that overseas people all over the world have more rights than you in the uk. I thought DD was working for you the votes.

  14. Derek Henry
    Posted September 29, 2017 at 6:04 pm | Permalink

    Foreigners sterling savings are not that much of a problem as they all just sit in in a savings account at the BOE earning interest.

    It is just another asset swap

    Reserves ——–> Bonds

    Bonds ———-> Reserves.

    It is never about affordability there are no children or grand children in sight. The only real issue is that by foreigners choosing to save sterling instead of buying UK goods and services they can keep their own exchange rate low and thus gain an advantage.

    When foreign exporters sell their goods and services to the UK and steal some of our aggregate demand. If you are unhappy about that then make it uncomfortable as possible for them to save the sterling they receive.

    All in all it is about the real terms of trade as long as we get more imports for our exports we are winning. When you look at trade from the right perspective the only things we can run out of is people and the skills and resources they use.

    We can never run out of £’s which is why exports are a cost and imports are a benefit. Let other countries produce the Tat we all consume. While it frees up more leisure time for us and allows to concentrate on high end products that will improve our
    productivity and things for public purpose.

    China is desperately trying to run a trade deficit instead of surpluses. They are tired of being the world slaves. They want to put their skills and resources to better use.

    • David Price
      Posted September 30, 2017 at 4:52 am | Permalink

      So we can all just sit around leisurely doing nothing and import everything using printed money?

  15. Bob
    Posted September 29, 2017 at 6:32 pm | Permalink

    “The UK government could improve the balance of payments by simply refusing to send the EU any more money after March 2019, which would be great news.”

    Sorry Mr Redwood, that horse bolted after Mrs May surrendered to Brussels in Florence last week.

  16. The Prangwizard
    Posted September 29, 2017 at 7:06 pm | Permalink

    I have been banging on for ages on the folly of selling our businesses to foreigners with such abandon. I would like stop hearing ‘open for business’ calls which sadly really means ‘everything is for sale, we are desperate for your money’. We ought to talk like President Trump here in the US where he is urging America to make things at home with home owned manufacturers and changing the tax rules to help.

    The extent to which our economy has been allowed to be taken over by foreign interests and products is evident from the content of the advertising we are subjected to on TV in particular. I’m not sure people realise just how many products and services are not ours and that so many of the pounds spent disappear overseas. We are impoverishing ourselves every minute of every day.

    • Mitchel
      Posted September 30, 2017 at 11:25 am | Permalink

      But spending money(that we have borrowed) on stuff we have imported(and in many cases don’t need) that mostly ends up in landfill…represents growth!

  17. Mark B
    Posted September 29, 2017 at 7:32 pm | Permalink

    Good evening.

    Off topic

    Maybe it’s me but, I detect a definite hardening of our kind hosts opinions, language and tone since the PM’s Florence speech.

    Why are we sending borrowed money abroad ? Can’t these other countries borrow money of their own ?

    • Mitchel
      Posted September 30, 2017 at 11:28 am | Permalink

      I have noticed it too.

      Battlestations!

  18. ian
    Posted September 29, 2017 at 7:53 pm | Permalink

    Puerto ricans starting to flee the island as flight resume to the usa, 100,000 of thousands on their way as big cities in the usa demand money from the gov to put them up.
    3.4 million people live on the island and of cos most won’t be going back after getting food stamps and other benefits and will be able take out car loans and so on with no checks needed. Boom time. Just waiting for the uk to follow suit.

  19. Ken Moore
    Posted September 29, 2017 at 11:20 pm | Permalink

    Perhaps Dr Redwood could endorse the view that as a country we are living beyond our means and have been for a very long time. Nobody is willing to deliver that message for one reason alone – cowardice.

    Tell the NHS it is bloated and inefficient, welfare is too generous, local councils are stuffed with non job essential staff, state pensions need cutting back..

    Cannibalising our asset base to pay for todays consumption is our folly. What happens when everything has been sold off to foreigners..there must be precious little left to flog off.

    • Mitchel
      Posted September 30, 2017 at 11:39 am | Permalink

      Too true!I’m 200 pages into Corelli Barnett’s “Verdict of the Peace” -his acerbic-almost polemic-account of our post war governments up until Suez.The way they quandered money-including large American loans-to maintain “our place in the world” whilst failing to re-equip industry and inflicting rationing on the populace at home long after the end of WWII.

      It’s required reading especially for anyone still deluding themselves about the “Special Relationship”.

      • Mitchel
        Posted September 30, 2017 at 11:42 am | Permalink

        “quandered” should of course read squandered.

  20. Pragmatist
    Posted September 29, 2017 at 11:58 pm | Permalink

    JR prior to the Referendum, you wrote on here and asked what we wished in effect for a first or continuing celebration of the referendum result. People suggested a one-off tax refund, a reduction in taxes, a one-day Independence Day annual holiday USA-style and so on. Now, all we have are moanings backtracking and defeatism. The BBC tonight are taking it as read, as “So many people” are unhappy that “we should indeed have a re-run of the Referendum.”
    The media says more and more people are taking out citizenship for the EU. really? Then bon voyage to them if you’ll excuse my French. Go pick a grape!

  21. Pragmatist
    Posted September 30, 2017 at 12:44 am | Permalink

    I hear Big Ben is going to cost double its original estimation for renovation. How much is the EU contributing? We should apply for all grants, loans, and assistance from the EU before we leave.I cannot believe the EU does not give money for such. Left to me of course I would give instead every MP a leaflet from an online watch maker and tell them to buy one at their own expense as most of them, particularly Remoaners don’t know what time of day it is.

  22. Pragmatist
    Posted September 30, 2017 at 12:46 am | Permalink

    Has Ryanair relocated to EU-Land yet or can’t they get a plane?

    • hefner
      Posted October 1, 2017 at 4:53 pm | Permalink

      From the start of the company, it has always been registered in Dublin, Ireland.

  23. Prigger
    Posted September 30, 2017 at 1:00 am | Permalink

    The Tory Party Conference is on 1st October . I’ve learned a new word “lanyards” and Tories are advised to take care of them. By unwritten law between parties, Party conferences are spared anti-demos..except now with Corbynistas. The Labour Party should be billed directly for the extra police costs unless they tell, meaningfully, their louts to not turn up.

    • Mitchel
      Posted September 30, 2017 at 11:45 am | Permalink

      Egg sellers are doing good business though!

  24. Prigger
    Posted September 30, 2017 at 1:48 am | Permalink

    Prior to the Referendum vote I never realised how many people in the UK were regressive. In the years of the EU, a new breed of Briton has emerged …( I wished at this instant in writing to express the notion of a person who has not evolved but the opposite, the opposite of evolved, but I found online that the opposite of evolved is… devolved! ) English is beautiful!
    But it is interesting how many in Parliament are not democrats at all but come from an Age of Serfdom where “Mi Lard knows best!” Or in this case Juncker the Luxemburger knows best. It must be Playtime for them to go through the motions of Parliament, cut and thrust, and when Playtime is over they get back to servitude writ large.

    • hefner
      Posted October 1, 2017 at 4:59 pm | Permalink

      Well, a proper thesaurus would have given you ” regressed”, which is a better description of what you are talking about.
      And yes English is beautiful with all those words borrowed from Saxon, Latin, German, Greek, French, … BJ is quite good with those, if anything else.

  25. am
    Posted September 30, 2017 at 5:26 am | Permalink

    Take some short-term pain for some long-term gain may need to be the option in the short term brexit without transition. However the Germans won’t view it that way aa there is no long term gain for Germany out of brexit just less cars sold in Britain which will probably destabilise Germany politically.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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