Monday 24 October 2016

Bank of England warns on UK account deficit

Anna Yukhananov

Published 08/04/2015 | 02:30

The Bank of England
The Bank of England

The Bank of England warned that Britain's current account deficit could trigger a shock to market confidence in the UK if the economy does not continue to recover.

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Minutes of the bank's recent Financial Policy Committee meeting, published yesterday, showed that the committee discussed potential risks from the UK's record overseas payments deficit.

The current account balance - the difference between money flowing in and out of the country - hit a record high in the third quarter of last year as a percentage of GDP, although it shrank slightly towards the end of 2014. Last year it hit £98bn (€134bn), or 5.5pc of GDP.

The Bank of England said that as long as investors remained confident in the UK, and the Treasury retained a "credible" fiscal policy, the current account deficit could be financed. However, it said that the deficit's size meant a shock could trigger panic.

Irish Independent

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