Deficit raises questions on UK recovery

Britain’s current account deficit was much bigger than expected in the fourth quarter of 2013, another warning sign about the sustainability of the country’s economic recovery, official data showed yesterday.

The deficit in the October -December period was £22.4bn (€27.1bn), down slightly from an all-time record £22.8bn in the third quarter. Economists had expected a deficit of £14bn.

The UK’s Office for National Statistics said the deficit was being driven, in part, by a fall in income from investments earned abroad — which were lessened by the strengthening of sterling — as well as Britain’s trade deficit.

The office confirmed that Britain’s economy grew 0.7% in October-December last year, compared with the previous quarter, and was 2.7% bigger than in the fourth quarter of 2012.

Economists had expected no change to the office’s previous estimates on Britain’s economic growth.

Britain’s full-year GDP in 2013 was revised down to 1.7% from a previous estimate of 1.8%. The office also said Britain’s dominant services sector got off to a solid start in 2014, growing 0.4% in January, picking up speed from December.

— Reuters