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Uk Runs A Current Account Surplus In Q4 2009

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http://www.ftadviser.com/FTAdviser/Regulation/Regulators/Treasury/News/article/20100712/9694888e-8d95-11df-81e1-00144f2af8e8/UKs-current-account-deficit-stands-at-96bn.jsp

UK's current account deficit stands at £9.6bn

Cara Waters

Monday , July 12, 2010

The current account deficit for the first three months of 2010 was £9.6 bn, minus 2.7 per cent of the gross domestic product (GDP).

This compares with a revised surplus of £0.5 billion in the last three months of 2009 (0.1 per cent of GDP).

This was the first current account surplus since the third quarter of 1998.

A deficit of £8.8bn was recorded with the EU compared with a deficit of £3.9 billion in the previous quarter.

The Office of National Statistics said compared with the last three months of 2009, the switch-back to a deficit was mainly due to a lower surplus on income.

This was compounded by a higher deficit on current transfers and trade in goods together with a lower surplus on trade in services.

Undervalued Sterling, anyone?

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http://www.ftadviser.com/FTAdviser/Regulation/Regulators/Treasury/News/article/20100712/9694888e-8d95-11df-81e1-00144f2af8e8/UKs-current-account-deficit-stands-at-96bn.jsp

UK's current account deficit stands at £9.6bn

Cara Waters

Monday , July 12, 2010

Undervalued Sterling, anyone?

A deficit of £8.8bn was recorded with the EU compared with a deficit of £3.9 billion in the previous quarter.

Undervalued Euro, anyone?

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Wait until austerity kicks in and with the consumer still attempting to pay off debt we will see serious surpluses in the years to come.

Don't imagine though that this is a good thing or that sterling will necessarily benefit.

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Priming the pan for early rate rises

Mike

It was a non pan- Euro 'can't afford the imports' quarter. A good sign of recessionary forces in a country which has such an unbalanced economy it cannot 'grow' without causing a trade deficit.

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Wait until austerity kicks in and with the consumer still attempting to pay off debt we will see serious surpluses in the years to come.

Don't imagine though that this is a good thing or that sterling will necessarily benefit.

No. But it shows you that things aren't quite as out-of-line as people would have you think.

Basically, the UK's BoP looks iffy when we're consuming like there's no tomorrow. When we stop - and this increasingly looks like it's whenever the world stops, our external finances snap back to something normal. People calling for parity with the dollar, etc. are way, way off.

Conversely, producing nations like Germany and Japan are fecked when consumption stops because their accounts stop balancing right at the point when they need to be "seen" to for confidence to reign.

Better to be a hanger-on than a leader in the all-you-can-eat globalisation buffet, I say.

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No. But it shows you that things aren't quite as out-of-line as people would have you think.

Basically, the UK's BoP looks iffy when we're consuming like there's no tomorrow. When we stop - and this increasingly looks like it's whenever the world stops, our external finances snap back to something normal. People calling for parity with the dollar, etc. are way, way off.

Conversely, producing nations like Germany and Japan are fecked when consumption stops because their accounts stop balancing right at the point when they need to be "seen" to for confidence to reign.

Better to be a hanger-on than a leader in the all-you-can-eat globalisation buffet, I say.

So a trend-defying current account surplus of 0.5 billion that's immediately turned around in the following quarter, to a trend-confirming deficit of 9.6 billion, means we've "snapped back to something normal"?

That was remarkably painless if so, but I don't buy it myself...

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So a trend-defying current account surplus of 0.5 billion that's immediately turned around in the following quarter, to a trend-confirming deficit of 9.6 billion, means we've "snapped back to something normal"?

That was remarkably painless if so, but I don't buy it myself...

AvidMerrionfan looks at everything through red white and blue tinted glasses.

e.g. A trade surplus with the US means the £ is under-valued against the dollar.

However a trade deficit v the Eurozone means, guess what, the £ is under-valued against the €.

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AvidMerrionfan looks at everything through red white and blue tinted glasses.

e.g. A trade surplus with the US means the £ is under-valued against the dollar.

However a trade deficit v the Eurozone means, guess what, the £ is under-valued against the €.

All I say is "wait and see". That's all I'm saying.

My avitar flies the flag today but it was Benanke and Bush first and following that pair, Trichet. I'm just pointing to the general direction of things as I see them and I don't change my point of view that often - every 6/12 months.

Oh, and my user name isn't derived from Avid Merrion.

Edited by AvidFan

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All I say is "wait and see". That's all I'm saying.

My avitar flies the flag today but it was Benanke and Bush first and following that pair, Trichet. I'm just pointing to the general direction of things as I see them and I don't change my point of view that often - every 6/12 months.

Oh, and my user name isn't derived from Avid Merrion.

Could you just explain how a trade surplus with the US means the pound is under-valued v the dollar, but a trade deficit with the eurozone doesn't the pound is over-valued v the euro.

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Could you just explain how a trade surplus with the US means the pound is under-valued v the dollar, but a trade deficit with the eurozone doesn't the pound is over-valued v the euro.

Well for starters, a small trade deficit is good as it reflects a balance with UK investment from outside. Nearly all of the money from the European Investment Bank went to the UK in the last 10 years, for example.

So a 3% deficit in goods and services with Europe means 3% of their wealth is being recycled through the UK. It doesn't mean we're getting 3% poorer each year.

Depends where you say "zero" is. For me, "zero" is minus 3%. Anything more negative and th epound is over-valued. Anything more positive and it's under.

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Well for starters, a small trade deficit is good as it reflects a balance with UK investment from outside. Nearly all of the money from the European Investment Bank went to the UK in the last 10 years, for example.

So a 3% deficit in goods and services with Europe means 3% of their wealth is being recycled through the UK. It doesn't mean we're getting 3% poorer each year.

Depends where you say "zero" is. For me, "zero" is minus 3%. Anything more negative and th epound is over-valued. Anything more positive and it's under.

3% of what?

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What's the same figure for the trade balance with the US?

I'm not sure why the hell I'm replying to this thread, but:

This compares with a revised surplus of £0.5 billion in the last three months of 2009 (0.1 per cent of GDP).

This was the first current account surplus since the third quarter of 1998.

A deficit of £8.8bn was recorded with the EU compared with a deficit of £3.9 billion in the previous quarter.

I'd say it was 500 million plus 3.9 billion, i.e. +4.4 billion. At a guess. As our two major trading partners are the US and the EU (not in that order).

Is there a point to what you are trying to say?

Edited by AvidFan

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Seems the surplus in trade with the US was 1.7 billion:

http://import-export.suite101.com/article.cfm/us-versus-england--top-uk-export-and-import-products

And it looks set to go higher this year:

The U.K.’s trade surplus with America accelerated to $900 million during the first quarter of 2010. England’s side seems on pace to exceed the $1.7 billion trade surplus with the U.S. for 2009.

And that's just trade. We usually run a surplus in services with just about every economy.

Maybe my $4.4 billion estimate is closer to the truth?

What point are you trying to make?

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I'm not sure why the hell I'm replying to this thread, but:

I'd say it was 500 million plus 3.9 billion, i.e. +4.4 billion. At a guess. As our two major trading partners are the US and the EU (not in that order).

Is there a point to what you are trying to say?

So the trade deficit for the US with the UK is only 0.1% , much less then 3%.

According to your logic that means the pound is overvalued against the dollar.

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So the trade deficit for the US with the UK is only 0.1% , much less then 3%.

According to your logic that means the pound is overvalued against the dollar.

:D Depends if the UK is "investing" in the US or not. I guess not.

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Anyway - no it doesn't. If you're measuring the balance of trade wth respect to the US and saying they have negative 0.1%, that still means the dollar is overvalued WRT the pound if you take -3% as the baseline.

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Why do you guess not?

This thread is longer running that mousetrap.

What's your point? It's a trade dynamic that reflects whether a currency should correct or not.

I think I know what you're getting at - but the point is, the correction mechanism takes quite a long time - years.

If the market was 100% efficient, there'd be no trade.

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Anyway - no it doesn't. If you're measuring the balance of trade wth respect to the US and saying they have negative 0.1%, that still means the dollar is overvalued WRT the pound if you take -3% as the baseline.

I see.

So with regards to the US it's them who should have a 3% trade deficit for parity.

But with the Eurozone it's the other way round.

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  • 143 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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