Data from ONS on Thursday showed that the current account gap narrowed to GBP 32.6 billion from a revised deficit of GBP 34.0 billion in the fourth quarter of 2015. The reading missed Reuters forecast for a drop to GBP 27.1 billion.
As a percentage of GDP, Q1 deficit was 6.9 percent, only just off a record of 7.2 percent set in the last quarter of 2015, far more than in other advanced economies. For 2015 as a whole, the deficit was revised up to 5.4 percent of GDP, the highest for a full year since annual records began in 1948.
Narrowing in the deficits on secondary and primary income is seen as the main reason. Britain's current account deficit remained near an all-time high in early 2016, highlights the nation's reliance on foreign financing and the risk of more pressure on its currency after it voted to leave the European Union.
“It's an amber warning light. It still seems to be the investment income balance, but it's not getting any worse . It's partly because we've been growing faster than our overseas partners,” Scotiabank European fixed income strategist Alan Clarke said.
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