Unit 4: UK and its current account deficit

Thank you to Mo Tanweer for digging out this detail on the breakdown of the UK current account deficit in 2015. It provides some revealing context to aid the evaluation arguments surrounding Britain's historically high external deficit!

Key points are:

The deficit is now around 6% of GDP - the highest on record

Net property income from overseas investment has turned negative - for a long time this was a steady positive contributor to the UK balance of payments accounts.

Of the UK current account deficit last year: 

• c.37% of it is the trade deficit i.e. the value of imported goods & services exceeds the value of exports
• c.36% of it is net factor income from abroad
• c.27% of it is the net unilateral transfers deficit for example affected by UK net contributions to the European Union

For info, the 2008 UK figures show how much things have changed:

• Trade deficit made up 90% of the UK current account deficit back then.
• Net factor income from abroad was in surplus to tune of c.16%.
• The net unilateral transfers has been stable – was around 26% back then