LONDON (Reuters) – Britain’s balance of payments shortfall got bigger in the last few months of 2018, hurt in part by a disappointing trade performance as the world economy slowed and Brexit neared.
The difference between money flowing in and out of Britain was negative to the tune of 23.7 billion pounds in the fourth quarter, bigger than a deficit of 23.0 billion pounds in the third quarter, the Office for National Statistics said on Friday.
At 4.4 percent of the country’s economic output, this was the biggest shortfall since the third quarter of 2016 — just after the Brexit vote — and was larger than expectations for a 23.0 billion pound shortfall in a Reuters poll of economists.
Bank of England Governor Mark Carney has previously warned that Britain’s large current account deficit left it reliant on “the kindness of strangers”.
That could be a risk as the country prepares to leave the European Union with no clarity yet on whether it can smooth its exit with a transition period.
Prime Minister Theresa May said on Wednesday she would step down after her Brexit divorce deal is secured. But it remains unclear if the deal she agreed with other EU leaders can pass parliament and lawmakers have rejected eight alternatives.
The larger current account deficit reflected weaker earnings for British investors from their overseas holdings, as well as a deteriorating overall trade deficit, which widened for the fourth quarter in a row, the ONS said.
Both are likely to reflect a marked slowdown in the world economy over the last few months.
It confirmed its previous estimate that Britain’s overall economy grew by a quarterly 0.2 percent but revised up its figure for annual growth to 1.4 percent in the October-December period from 1.3 percent previously.
For 2018 as a whole, the ONS confirmed the British economy grew by an annual average of 1.4 percent, the weakest expansion for any year since 2012.
(Reporting by Andy Bruce and Jonathan Cable; email@example.com; +44 20 7542 5109)