Inflows into UK financial institutions grow in Q3

Money flowing into UK banks and building societies from other developed countries shot up in the third quarter of 2011, rising significantly above the level of outflows over the three month period, according to data released by the Bank of England.

In total, UK financial institutions’ claims - that is loans, advances and other lending to external countries - rose by $91.6bn (£58.5bn) over the three months to September 2011, while liabilities - money flowing into the UK - rose by $80bn (£51.1bn).

However, according to the Bank of England figures, money flowing into the country from other developed countries rose by $109.7bn (£70.3bn) in Q3, while outflows rose by $91.7bn (£58.7bn) over the same period.

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Germany accounted for the largest change in both liabilities and claims over the three months, with inflows rising by $32.5bn (£20.8bn) while outflows rose by a massive $124.6m (£79.9bn).

Outflows overall we constrained by the fact that several countries recorded a large net negative for liabilities, meaning they paid back more than they borrowed. Inflows from the US, for example, were down by $83bn (£53bn), while heavily indebted eurozone countries Italy and Spain recorded a decrease of $37.2bn (£23.7bn) and $28bn (£17.9bn).

Total outstanding liabilities - money owed by UK institutions - to developed countries, offshore centres, developing countries, international organisations and others now stands at $6,229bn (£3,980bn), while total claims - money owed to UK institutions - stands at $5,807bn (£3,722bn).