Profits leaving the country.

BlueBelle

But surely it’s all part of it Monica it may not balance out figure wise but it’s all part of money movement both ways !
Many of our businesses set up in other countries Dubai, Japan China which takes the flow away from here.
Surely it’s all a two way process

It is of course but there is a trade gap we import about £50billion more than we export every year.
This is what Trumps tariff war is all about the US imports a great deal more than it exports, thats why the US borrows even more than we do, 125% of GDP.

mum2three

I know little about how finance works so, perhaps someone can explain something I'm curious about.
When someone comes to Britain and sets up a business but sends money back to their own country, what effect does that have on our economy?

Have you ever purchased goods made in a foreign country?
Where do you think your money went?

But surely it’s all part of it Monica it may not balance out figure wise but it’s all part of money movement both ways !
Many of our businesses set up in other countries Dubai, Japan China which takes the flow away from here.
Surely it’s all a two way process

As I said, I don't understand finance. I'm just curious to know what effect it has when so many businesses in this country are owned by foreigners who send part of their profits to their own countries. It means that there is less money in circulation as I understand it.
Thanks for your responses.

BlueBelle

And what of all the rich with overseas accounts !!!!

As a proportion of total inter-country movements these are barely visible. There are just not enough wealthy people for their transfers to even feature.

The Trade balance outflow between imports and exports is about £50 billion each year thats around 0.5% of GDP. In addition we pay a lot of interest on borrowing, government debt costs £100bn a year, plus commercial debt, it's not all owed to foreigners but a great deal is.

International companies can choose where they pay tax, the favorite for Europe is Ireland where Corporation Tax is 12% half our rate. In addition they can manipulate profit by choosing values of imported, goods, services and intellectual property that suit themselves.

And what of all the rich with overseas accounts !!!!

And the water companies are not giving a very good service either.

The money that is made by the privatised utility companies doesn't stay here either.

ameliaharris45

On one hand, the business contributes to the UK by creating jobs, paying taxes, and generating economic activity, which supports growth. On the other hand, the money sent abroad is effectively leaving the UK economy, meaning it isn’t being spent or reinvested locally. However, this outflow is usually only a portion of what the business earns, and the initial economic benefits—like employment and services—often outweigh the loss

Money is going out all the time. Apart from business transactions, everytime you go on holiday abroad you are taking money to other countries that will not be spent in the UK, every time you buy things from Amazon, the profits go overseas.

You cannot isolate one small stream of money and calculate its effect on the economy, because there is no answer. You can only look at the broad daily flow of funds in and out of the UK and assess the economic sitation from that.

On one hand, the business contributes to the UK by creating jobs, paying taxes, and generating economic activity, which supports growth. On the other hand, the money sent abroad is effectively leaving the UK economy, meaning it isn’t being spent or reinvested locally. However, this outflow is usually only a portion of what the business earns, and the initial economic benefits—like employment and services—often outweigh the loss

Our universities are dependent on the fees of foreign students. Many from the countries that migrant workers are sending their remittances to.

University fees cost foreign students £11,000 - £38,000 and can go as high as £70,000, plus, of course their living expenses. There are nearly 750,000 foreign students at British Universities.

If they’ve set up a business, they’ll be paying uk taxes. Unlike expats. They can spend their own money on whatever they wish.
Don’t understand what your problem with that is?

I agree with M0nica.

Is there a notion that it’s all one way traffic when in fact there are around 5 million Britons working outside the UK? Few will only spend money in their current country of residence.

I’m reminded of the old TV sitcom Auf Wiedersehen, Pet about the Geordie construction workers who went to work in Germany. Didn't some of them have family back in Newcastlwe they were supporting?

In fact we all send money overseas in one form another whether it’s through buying foreign-sourced goods and services - streamed TV apps being a case in point - sending money gifts to families overseas or spending money as international tourists.

Then there’s the matter of squirrelling money away in savings. This is one of the arguments about ISAs (and other savings), isn’t it? That they aren’t contributing anything to grow the economy, whereas stocks and shares do; which isn’t true unless buying shares in a start-up to inject initial capital into a new business. Otherwise stocks and shares are just traded for profit among people with no real connection to the business, largely tax-free but for some CGT or Stamp Duty on larger transactions.

I figure so long as someone pays their taxes then they can spend their money how and where they chose.

OP was proposing money is sent back to family overseas , many do

Buying anything imported has the same effect, buying from Amazon means all the retail profit goes to the US as well
Much of social media and online spending also goes overseas

migrationobservatory.ox.ac.uk/resources/briefings/the-fiscal-impact-of-immigration-in-the-uk/

There are many other articles available online looking at this from many aspects.

My personal slant is that the immigrant transfers make up for the way Britain, still a wealthy nation, despite recent problems, has cut back on overseas aid and then directedd more of it to dealing with immigrants in this country rather than helping poor countries overseas.

Immigrant transfers are probably better targetted and more effective £1 for £1, in getting to the core of poverty. While the papers are always full of magnificent houses built with immigrant transfers. I think that far more goes in paying for education, paying off the debts of poverty, paying for health care and, yes, paying for a lovely new house. if you have been living in cramped ill-serviced house, isn't that what most of us would do?

Two completely different scenarios have been suggested in the first two responses.

Which one is the closest to what you had in mind, OP?

No, people from poorer countries help their birth families in their homeland. If they pay tax and work its their money to use as they wish.

Do you mean like Anazon and Bezos?