UK’s current account deficit likely widened in Q4 2015

The UK’s current account has shifted from the trade deficit in early part of this decade as net property income balance outside of the UK began to decline. This is evident from the UK economy’s outperformance in comparison to continental Europe that was seen in the higher return rate of direct investment in the UK, according to Societe Generale. The higher income was later moved abroad.

Nevertheless, growth in the euro area has been steady, while growth in the UK is slowing down. This should reduce performance contrast and deficit on net property income. There are signs for that; however, the uncertainly in net property income balance might swamp the data for Q4 2015. Moreover, trade deficit had also widened in Q4. According to Societe Generale, UK’s current account deficit for Q4 is expected to have widened to £20.5bn from £17.5bn.