Nineteen-sixty was by far the worst year for the United Kingdom current balance since 1951. The £100 million deficit recorded in the third quarter will probably prove to have been repeated in the fourth and the deficit for the year was probably about £150-175 million (table 20). Private investment overseas appears to have been maintained at a fairly normal level and the net outflow on inter-Governmental loans was higher than usual. Moreover, the overseas sterling area drew heavily on its sterling balances, perhaps by about £200 million. Yet after payment of £127 million to the IMF during the year, the reserves rose by £177 million.

This paradoxical result is due to a capital inflow, particularly in the second half of the year, on an unprecedented scale. A rough attempt is made in table 21 to estimate the amount of this ‘abnormal’ capital inflow during 1960. The definitions of I abnormality' are necessarily arbitrary and some of the figures are little more than guesses.

In the top part of the table are set out estimates of the transactions resulting from the flow of trade and services, from Government grants and loan transactions, and from the general trend of private long-term capital movements in recent years. From the balance thus obtained the normal ‘balancing item’ is subtracted (representing net receipts which are not identified in the official statistics.)