The current account deficit of United Kingdom in the third quarter of 2011 has come to the all time highest. According to the data published from the Office for National Statistics, the current account deficit during the third quarter has touched 15.2 billion pounds. This is the highest current account deficit of UK on record.
The amount mentioned can be equated to 4% of the GDP at the current market price. In the previous quarter, the amount was 2%. This is also being considered to be the largest current account deficit ratio to GDP since the time of second quarter of 1990.
An analysis of the data showed a clearer picture of what led to this huge current account deficit. The surplus on income decreased by 4.2 billion pounds to 0.3 billion pounds and trade deficit went up by 2.7 billion pounds to 9.9 billion pounds. Lastly, there has been a huge increase in the deficit of current transfers by 0.9 billion pounds and it went up to 5.7 billion pounds.
The huge increase in trade deficit was quite worrying as it reached to almost 2.6% of GDP in the last quarter. In the second quarter of 2011, the deficit was 1.9% of the GDP. All these figures clearly show that the economic turnaround is almost impossible in the coming months and the government authorities must do something drastic in order to bring the country out of this financial mess.
Senior economists at a leading financial institution have expressed their view that,” hese data (GDP and current account statistics) support the widespread view that the near-term economic outlook is rather bleak. Household demand appears paralyzed by depressed real incomes and fears of unemployment. Government spending is set to become a significant drag on aggregate demand and the contraction in the euro area is likely to result in further weakness in UK exports.”
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