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The Current Account Defecit

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Biggest ever recorded. Have a prosperous 2006 everybody :D

LONDON (AFX) - LONDON (AFX) - The UK recorded its biggest ever current account deficit of 10.2 bln stg in the third quarter, driven by a wider trade in goods and services gap, official figures showed.

The deficit is the highest since records began in 1955, the office for National Statistics said.

Analysts were expecting a 7.8 bln stg shortfall, though the gap for the second quarter was revised down substantially to a 1.4 bln stg deficit from the previous estimate of 3.1 bln stg.

The statistics office said the third quarter deficit is equivalent to 3.4 pct of GDP, up from 0.5 pct of GDP in the second quarter. This is the highest rate since the fourth quarter of 2000. The UK has now recorded a current account deficit for every quarter since the third quarter of 1998.

On a geographical basis, the ONS said the UK recorded a 7.5 bln stg deficit with the 25-nation EU, compared with a 5.8 bln stg shortfall in the previous quarter. Meanwhile, the current account deficit with non-EU countries was 2.7 bln compared with a surplus of 4.4 bln stg the previous quarter.

The total deficit on trade in goods in the third quarter came in at 17.0 bln stg, equivalent to 5.6 pct, the highest since the fourth quarter of 1974.

The trade in services surplus fell to 2.9 bln stg in the quarter from 5.0 bln in the previous quarter, largely as a result of the of the 1.9 bln stg insurance claims related to Hurricane Katrina.

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The trade in services surplus fell to 2.9 bln stg in the quarter from 5.0 bln in the previous quarter, largely as a result of the of the 1.9 bln stg insurance claims related to Hurricane Katrina.

Well at least we know what GB is going to blame this time :D

D

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So what’s the grand total now ?

Must be about £550bn and this does not include PPP that is hidden so the gov stays within the 3% GDP rules imposed by Europe.

If you take £550bn @ 5% and divide it by 25m (Number of people working) then how much do we end up paying on the interest only loan each year.

Would do the sums but my calculator does not have enough digits

Is it any wonder taxes are going up !

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So what’s the grand total now ?

Must be about £550bn and this does not include PPP that is hidden so the gov stays within the 3% GDP rules imposed by Europe.

If you take £550bn @ 5% and divide it by 25m (Number of people working) then how much do we end up paying on the interest only loan each year.

Would do the sums but my calculator does not have enough digits

Is it any wonder taxes are going up !

£1100

or about 20% of the average worker's annual tax bill (roughly?)

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Why is bigger better? How does this influence the future direction of interest rates??

Thanks easy to answer

The more you borrow the higher the risk becomes of you defaulting on the loan so lenders demand more profit or in this case more interest on the £550bn

It could be worse, for every man, woman and child in the USA there is $118,000 of both public and private debt all collecting interest for the money masters.

Don’t know about recession or depression ! I think we are all going to see a total meltdown if debt is allowed to continue rising as it has in the past few years.

Maybe them BTL’s will be not better or worse of then us after all.

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Still can't get my head around this.

A large trade deficit means that our creditors expect a better return on the money we owe so interest rates should go up.

To redress the balance of trade we need a weaker pound to make exports more attractive and therefore we need to put interest rates down.

Which is it?

The pound fell yesterday and this morning against the dollar but I thought this was a reaction to the MPC report which hinted that UK interest rates may fall. There has been no dramatic change in the pound as a result of the enormous trade deficit figures and this afternoon the pound is on the way back up.

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Guest STR2004

Still can't get my head around this.....

I asked the same question a while ago when the US deficit figures were released. There were a few good explanations of how national debt affects interest rates. The thread is here.

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  • 338 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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