UK: A Nasty Looking Current Account

Today’s GDP figures – the third take on the final quarter of 2013 – showed a rise of 0.7%, as before, and confirm that business investment contributed significantly to that growth. Overall wages and salaries rose by 3% in 2013 compared with 2012. More here.

The bad news today with in the balance of payments. The first estimates for the third quarter currnet account deficit were awful, a deficit of just over £20 billion. Today’s showed that deficit revised up, to £22.8 billion, and only a small fall to £22.4 billion, 5.4% of GDP, in the fourth quarter.

These are big numbers, though they are not mainly driven by the trade deficit, which narrowed to £5.7 billion in Q4 from £10 billion in Q3. The 2013 deficit narrowed from £33.4 billion to £26.6 billion. The damage is being down by a collapse in investment income, traditionally in surplus. It was in deficit by £17.4 billion in 2013, mainly in the final two quarters of the year. More here.

This piece is cross-posted from with permission.