UK current account deficit narrows ahead of coronavirus slowdown
The UK’s current account deficit narrowed in the final quarter of 2019, figures showed today, although this was due in large part to movements in gold trade.
The deficit is the difference between the value of the goods and services a country imports and the goods and services it exports.
Britain imports more goods and services than it exports and plugs the gap by borrowing. Former Bank of England governor Mark Carney has said the UK is reliant on the “kindness of strangers” to make up the shortfall.
Yet the current account deficit stood at £5.6bn in the fourth quarter of 2019, the Office for National Statistics (ONS) said, down from almost £20bn in the previous three months. It was the UK’s smallest current account deficit in nine years.
However, if gold movements were stripped out the deficit came to £17.1bn, only around £2bn lower than the previous quarter.
The ONS also confirmed that the UK economy flat-lined in the final three months of 2019 as its initial estimate had suggested.
The UK’s borrowing is about to surge as it pays for an unprecedented package of stimulus measures to counteract the economic effects of coronavirus.
The economy was already in a relatively weak position, although had been showing signs of recovery, before the virus hit.
Economists now predict a very steep contraction in UK GDP in the second quarter of 2020 as the coronavirus lockdown all but stops the economy.
The Lloyds business barometer today showed that UK business confidence fell to its lowest level since October this month amid the coronavirus outbreak.
Paul Gordon, a managing director at Lloyds, said: “There is now little doubt that businesses across the board are feeling the impact of Covid-19. Many businesses have already had to pause their work and others are trying to adapt to new ways of working.”