LONDON: Britain racked up a record shortfall in its current account in the first three months of this year, as the deficit ballooned to 51.7 billion pounds ($62.8 billion) or 8.3% of gross domestic product, official data showed on Thursday.
The Office for National Statistics said the figures were subject to more uncertainty than usual due to the impact of post-Brexit changes in how data is collected for goods imports and foreign direct investment, which are being investigated.
Economists polled by Reuters had expected a deficit of just under 40 billion pounds.
The shortfall was the biggest in records going back to 1955.
The ONS said the primary account swung back into the red after a rare surplus in the last three months of 2021 as income from British assets abroad was more than offset by investment-related flows, including dividends, out of the country.
Stripping out the effect of trade in precious metals – which the ONS views as a distortion due to London’s role as a gold-trading hub – the deficit was still a record at 7.1% of GDP, but by a smaller margin relative to the previous peak in late 2014.
The ONS also said Britain’s economy grew at the same pace as previously thought in the first three months of 2022, when the public had yet to feel the full impact of fast-rising in inflation which now threatens to cause a recession.
Gross domestic product in the world’s fifth-biggest economy increased by 0.8% in the first quarter compared with the final three months of 2021.
Economists polled by Reuters had expected no revision to the figure in Thursday’s release.
Britain’s economy risks shrinking in the April-June period due to the hit to demand caused by the jump in inflation to a 40-year high of 9.1%, the effect of an extra bank holiday to mark Queen Elizabeth’s 70 years on the throne, and the end of mass COVID-19 testing and vaccination programmes.
A measure of households’ disposable income fell in real terms for the fourth quarter in a row, the longest such run on record, underscoring the scale of the inflation hit to consumers.
UK inflation hits new 40-year high of 9.1% in May, highest in G7
Bank of England Governor Andrew Bailey said on Wednesday it was “very clear” that Britain’s economy was at a turning point and was starting to slow.
The ONS data showed households had not dipped further into their lockdown savings to finance their spending.
The saving ratio held at 6.8% of disposable income, still above its level of 6.0% immediately before the pandemic.