The UK’s mammoth current account deficit was £18bn larger than previously thought in 2015, according to revisions to the national accounts released today by government statisticians.
The Office for National Statistics (ONS) released the revisions today ahead of changes to how the national accounts are collated, which will be begin with revised national accounts figures covering 2016 at the end of September.
The revisions to the current account figures show that the UK borrowed almost £100bn from the rest of the world in 2015 overall, much more than was previously thought. Indeed, the current account deficit was bigger than thought in every year in the period scrutinised, from 1997 to 2015.
That means that the current account to GDP ratio for 2015 is now 5.3 per cent, rather than the previous reading of 4.3 per cent.
Meanwhile the net international investment position – the difference between foreign assets owned by Britons and British assets owned by foreigners – saw a massive revision of £261bn for 2015.
The updated figures will add to concerns that the UK economy is overly reliant on funding from abroad to sustain growth.
If overseas investors lose confidence in UK growth it could cause a significant financing shock, with big falls in prices for assets like stocks and commercial property. Economists, including at the Bank of England, fear that the deficit is being used to fund the consumer borrowing boom, rather than for investment in projects boosting future growth.
A further build-up in the current account deficit could also cause another adjustment in the exchange rate; the high current account deficit is seen by some economists as an exacerbating factor in the post-Brexit vote devaluation of sterling against other major currencies.
Most other comparable developed nations have far lower current account deficits, or even large surpluses. In 2016 Turkey, the nearest rival to the UK in the G20 group of major economies, had a current account deficit of 3.7 per cent, while Germany’s surplus stood at 8.4 per cent.
While the International Monetary Fund judges the UK’s statistics to be “adequate”, the ONS has been reviewing how it measures the British economy as it looks to bring some of its most crucial statistics up to speed with changes wrought by modern technology. Balance of payments data is relied on by macroeconomists throughout government and the private sector.