Monday 21 August 2017

Bank of England warns on UK account deficit

The Bank of England
The Bank of England

Anna Yukhananov

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.

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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