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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 U.K. has traditionally had a deficit on visible trade

-that is, she has imported more goods than she has exported. However, in the past this has been more than compensated for by the surplus which she has earned on invisible account. Indeed, from the middle of the nineteenth century up until 1931, the U.K.’s balance on

Balance of payments 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 until the Second World War, the deficits were relatively small. In the 1940s the U.K. was forced to liquidate many of its overseas assets and to borrow substantial sums to pay for the war, with the result that, although on average the current balance continued in surplus, the immediate post-war years saw considerable changes. After 1958, the current balance tended downwards into deficit until 1968. It recovered, however, to a surplus in the following years until in 1973 the increase in the price of oil by O.P.E.C. put the U.K., as it did many other developed countries, into the largest ever deficit in visible trade. The visible imbalance reached over £5,000 million in 1974. The visible balance remained in deficit until, with the development of the U.K.’s own oil resources in 1980, the visible balance recorded a substantial surplus for the first time. The table on the previous page shows the composition of the balance of payments for the U.K. in 1981.

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