Seema Malhotra – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Seema Malhotra on 2016-01-22.

To ask Mr Chancellor of the Exchequer, what assessment he has made of the potential consequences of the current account deficit on the UK economy; and if he will make a statement.

Harriett Baldwin

Despite narrowing in Q3 2015 to -3.7 per cent of GDP, the current account deficit remains high by historical standards. The widening in the UK current account deficit in recent years has been driven by a deterioration in the UK’s net investment income from abroad, while the trade deficit has continued to improve. The Office for Budget Responsibility expect the income account to “improve gradually over the forecast period” as the factors that have temporarily depressed the returns on the UK’s net assets are expected to recede, and the current account deficit continues to narrow to -2.1 per cent by 2020. Furthermore, the government’s plan to complete the repair of the public finances will support a gradual narrowing of the current account deficit, limiting any effect on the exchange rate, though we remain vigilant to the risks.