UK current account gap smaller than expected

UK current account gap smaller than expected
UK disposable household incomes inched up 0.1 per cent in the fourth quarter.

London - Gross domestic product grows 0.4% in Q4



By Reuters

Published: Thu 29 Mar 2018, 8:38 PM

Last updated: Thu 29 Mar 2018, 10:40 PM

Britain's current account deficit was much smaller than expected last year, its statistics office said on Thursday, potentially easing concerns about the country's reliance on foreign investors to fund itself as Brexit nears.
The Office for National Statistics also confirmed economic growth slowed slightly at the end of 2017 though the dominant services sector picked up a bit at the start of this year.
The current account deficit stood at £18.4 billion ($25.9 billion) in the fourth quarter, much lower than a median forecast of £24 billion in a Reuters poll of economists and below all forecasts in the poll.
That left the full-year deficit at £82.9 billion or 4.1 per cent of GDP, the narrowest as a share of the economy since 2011 and down sharply from a record high of 5.8 per cent in 2016.
"The UK's deficit with the rest of the world shrank as the UK received increased earnings on foreign investment thanks to a growing world economy," ONS statistician Rob Kent-Smith said. Bank of England Governor Mark Carney has said Britain's balance of payments shortfall leaves it reliant on the "kindness of strangers".
Separate data on Thursday showed Britain's housing market remained soft, reflecting the financial squeeze on many households.
The ONS said disposable household incomes, adjusted for inflation, only inched up 0.1 per cent in the fourth quarter.
The ONS confirmed gross domestic product grew 0.4 per cent on the quarter - slowing from 0.5 per cent in the third quarter - and 1.4 per cent compared with the last three months of 2016.
For 2017, the ONS raised its economic growth estimate to 1.8 per cent from 1.7 per cent previously.
However, the annual rate remained the lowest since 2012 and Britain continues to lag behind stronger growth in other rich economies, hurt by the hit to consumer spending after the 2016 Brexit vote which weakened the pound and pushed up inflation.
The savings ratio for 2017 was the lowest on record at 4.9 per cent of gross disposable income, and the ONS said households were net borrowers for the first time since records began in 1987.
The Bank of England said the number of mortgages approved for house purchase fell to 63,910 in February from 67,110 in January, below economists' forecasts of a smaller drop to 66,000 in a Reuters poll.
Mortgage lender Nationwide said house prices in Britain rose at the slowest pace in seven months in March.
The ONS said Britain dominant services sector grew by a monthly 0.2 per cent in January, picking up some speed. Over the three months to January, growth of 0.6 per cent was the fastest since the end of 2016.


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