Foreign countries and international institutions during a specific period. The data are collated on

The principle of double-entry bookkeeping, although, by convention, the figures are published in a

Single column with positive (credit) and negative (debit) signs. The entries in the account should,

Therefore, add up to zero, but because of measurement problems they fail to do so in practice and

recourse has to be made to a balancing item. Transactions are divided into two broad groups: current

account and capital account. The current account is made up of trade in goods (so-called

Visible trade) and in services and the profits and interest earned from overseas assets, net of those

Paid abroad (invisible trade). It is the current account that is generally referred to in discussion of

the state of the balance of payments. The capital account is made up of such items as the inward and

Outward flow of money for investment and international grants and loans.

The UK has traditionally had a deficit on visible trade — that is, it imports more goods than

It exports. However, in the past this has been more than compensated for by the surplus which

It has earned on invisible account. From the middle of the nineteenth century up to 1931 the

UK’s balance on current account was always in surplus (except for the period during the First

World War and perhaps to a minor extent in 1926). Even after 1931, up to the Second World