UK deficit swells
Current account gap hits a record 7% of GDP in Q4
london — Britain’s current account deficit has surged to a record high, underscoring a weak spot in an economy that is coming under sharper focus before a vote on whether to remain in the European Union (EU).
While official data also showed the economy grew slightly faster than previously thought, campaigners on both sides of the EU debate seized on the much-bigger-thanexpected gap in the balance of payments to push their views. A third piece of data suggested consumers were being put off by the uncertainty of the ‘In-Out’ debate.
Finance minister George Osborne said the widening of the deficit to a record seven per cent of gross domestic product (GDP) — up from 4.3 per cent of GDP in the third quarter — underscored the importance of Britain voting to remain in the EU on June 23.
“Today’s figures expose the real danger of economic uncertainty and shows that now is precisely not the time to put our economic security at risk by leaving the EU,” Osborne said.
Bank of England governor Mark Carney has said a vote to leave the bloc would test the “kindness of strangers” who cover Britain’s bal- ance of payments shortfall. Sterling has weakened sharply this year on concerns about the referendum.
But campaigners for Brexit said Thursday’s data showed Britain would flourish on its own because it would no longer have to fund the EU’s budget and the scale of its trade gap meant EU countries would be keen to do a deal to keep their exports flowing.
A survey published on Thursday showed a measure of consumer confidence remained stuck at its lowest level in more than a year, hurt by worries about the EU referendum and the euro zone’s persistent economic problems.
For 2015 as a whole, the current account deficit hit a record 5.2 per cent of GDP. Britain’s economy grew by a quarterly 0.6 per cent in the October-December period, helped by the huge services sector.