§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer how the deficit in trade in manufactures is being financed. [35988]
§ Mrs. Angela KnightThe current account deficit over the past two years has been less than ½ per cent. of GDP, and around one third of the deficit on trade in manufactures, with strong surpluses on trade in services and overseas investment income. The current account deficit is financed by capital account inflows—net overseas investment in the UK—reducing net external assets. But the UK's net external assets have recently been rising, to £70 billion at the end of 1996, Q1. This reflects net capital gains on our net assets outweighing any capital inflows.