CONFIDENTIAL
£'000
Exports
Imports
Deficit
1970
99,500
111,800
12,300
1971
104,300
143,600
39,300
1972
101,000
160,800
59,800
1973
126,800
229,200
102,400
1974
158,800
254,600
95,800
1975
156,876
271,561
114,685
1976
204,300
382,500
178,200
The table is a plain demonstration of an established visible trade deficit which is increasing.
*
5. The entries for invisibles are much less certain and not capable of inspection over such a time period. Much of the information has been gained as a result of special studies and can only be questioned for correctness of methodology or where alter- native sources are available. It is possible to challenge two entries, private transfers and travel. Private transfers include in their calculations two items which properly belong in the capital account, namely investment in UK securities of £3.7m, and the repatriation of capital amount of £16.9m. This last is sometimes difficult to attribute between accounts but cannot with any certainty be placed in the current. The travel accounts surplus presented is the net of £24.5m credits and £8m debits which have
The usual been locally assessed in Hong Kong.
source of data is the UK Department of Trade's International Passenger Survey which shows £5m credits and £3m debits. It is argued that these last are too low, since payments in Britain could be from Hong Kong residents' bank accounts in this country, and, since Hong Kong is a stopover on the way to Japan and Australia, amounts attributable to Hong Kong are placed instead with those countries. The magnitude of difference between absolute figures is sufficient to question the worth of those assessed in Hong Kong. It would be wrong to suggest that this demonstrates anything other than a particular inexactitude in the travel estimates though, if taken together with the possible adjustment to private transfers, there are important consequences for the current balance. Combined they reduce the surplus on invisibles by £35.1 implying a private sector deficit of £30.335m in place of a surplus of £4.765m.
The effect on the overall current account deficit is to increase it from £69.235m to £104.335m* . The general statement that private
*
/sector
The attribution of mortgage payments to the current account is also incorrect though since it is included as part of a total which does represent genuine current account transfers it is impossible to adjust.
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