Britainís total current account deficit substantially exceeded previous forecasts for the last quarter of 2013, official data has indicated.
The deficit between September and December was identified to be a monumental £22.4 billion, which is only slightly lower than the record high of £22.8 billion illustrated in the third quarter of last year.
However, economists have predicted that the deficit will begin to shrink in the final three months of this year, to a substantially lower £14 billion as the effects of the countryís economic recovery begins to sink in.
Nevertheless, one market expert branded the deficit as ëworryingly largeí, and a clear sign that the government has failed in its aim to bring down public and private sector levels of debt over their tenure in power.
The annual current account deficit for 2013 was identified by the Office for National Statistics to be £71.1 billion, which amounts to 4.4% of Britainís total GDP and is only narrowly lower than the record 4.6% yearly deficit recorded back in 1989.
However, there was more positive news to do with the countryís trade deficit in relation to the rest of the globe, with the gap between the number of goods and services the country imports compared to its total exports falling to £5.7 billion in the last quarter of 2013, compared to £10 billion in the quarter before.
The reason given for the sharp fall in the deficit was the countryís excellent performance within its service sector in the latter stages of last year, which displayed a surplus of £1.4 billion.
There was also good news about Britainís trade deficit within goods, with the ONS identifying that the gap closed by £ 3 billion in the last quarter of 2013. However, this was attributed to declining imports into the country, as oppose to rising exports out of it.
The ONS disclosed that imports dropped by £3.4 billion in the last quarter of 2013, with oil and manufactured itinerary imports experiencing g the sharpest fall of £1.4 billion and £1 billion respectively. Exports however dropped by £0.4 billion during the same period.
The countryís income account, which is the total income it receives from its investments in foreign countries compared to how much foreign investors receive from their investments in Britain also rose to a deficit of £10.3 billion, with this actuality being attributed by the ONS to the increasing value of the pound compared other currencies.
Howard Archer, chief UK and European economist at IHS Global Insight, branded the deficit ëworryingly largeí, and highlighted that the country would have to begin picking up its level of exports soon in order for the economy to truly begin recovery.
“Although the trade deficit actually narrowed appreciably in the fourth quarter, the UK suffered a large deficit of £10.3bn on its net income account,” he said.
“It has to be hoped going forward that improving global growth not only supports UK exports but also lifts earnings on UK investment abroad.”