Increase In UK Current Account Deficit
Britain is evidently still struggling with it’s levels of current debt according to the latest figures just released by the National Statistics Office. A small surplus in the Public Sector Net Borrowing figure in July has transformed into a sfiizable deficit in the latest data for August. The borrowing requirement for the month now stands at £10.883Bn compared to the revised July figure of £0.466Bn surplus, keeping this in context it appears that the July number was the anomaly and markets fully expected a deficit of around £10Bn this month.
Falling unemployment, increased corporate profits and an elevated level of transactions in the housing market have all served to increase the taxation take in the month of August. This rise in income however has been offset by an increase in outflow, both the interest and pension payments bills increased on the month as did contributions to the capital spending program.
The UK’s government appears to be keeping it’s pledge to eliminate the country’s current deficit, much of the latest figures are being driven by semi state agencies, municipal authorities and some activity by the Bank of England. The Central government portion of this latest deficit figure stands at just £3.1Bn albeit in contrast to the surplus of £2.5Bn achieved in July. Removing interventions from the data and the actual current deficit for the month looks more like £11.6Bn, this is compared to an ex-intervention figure of just £0.3Bn in July and a market expectation for £11.8Bn in August.
British debt measurement methodology underwent a reconfiguration last month to bring it more in line with European standards. The national rail network for example has now been included in the current account calculations. Overall this has is believed to have had a positive impact on these latest figures, had the more traditional methodology been used then the August Public Sector Borrowing Requirement would look more like a £12.5Bn deficit.
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