The current account deficit of UK expanded in the third quarter, as the country reported its weakest performance in trading of nearly 3 years. The difference between the money flowing into the UK, and those leaving the borders of the country, is 25.5 billion GBP (31.3 billion USD), according to the National Statistics Office. This equates to 5.2% of gross domestic product (GDP). The trade deficit widens to 2.8%, which is the highest figure since the fourth quarter of 2013.
It is expected that the current account deficit to be two times larger than those of USA, at a level above 5% of GDP. The concerns, however, were partly allayed because of the weaker currency that has the potential to stimulate exports and reduce the cost of imports. The economists expect the trade deficit to shrink to about 4% in 2017 and so the UK can rely less on the willingness of foreigners to buy British assets.
The economy is showing resilience to the Brexit vote so far, with separate figures showing GDP grew 0.6 percent in the third quarter, the same as in the second quarter and more than previously estimated. Consumers once again drove the expansion, offsetting the biggest drag from trade since 2012.
Separately was published the final reading of GDP data in the third quarter, which were revised upwards from 0.5% to 0.6% on a quarterly basis. The value becomes the same as that in the second quarter. Once again the engine of growth is consumption, which managed to offset the negative impact of trade, which is the biggest since 2012. The net trade erased 1.2 percentage points from growth, not 0.7 points as previously estimated.
The consumer spending grew by 0.7%, as was the previous estimate. The increase in business investment was revised downwards from 0.9% to 0.4%. Dominant was the service sector, which grows more than initial estimates to value of 1%.
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