British current account deficit balloons

Britain's current account deficit has surged to a record high, underscoring a weak spot in an economy that is coming under sharper focus before a vote on whether to remain in the European Union. While official data also showed the economy grew slightly faster than previously thought, campaigners on both sides of the EU debate seized on the much bigger than expected gap in the balance of payments to push their views.
Finance minister George Osborne said the widening of the deficit to a record 7.0 percent of gross domestic product - up from 4.3 percent of GDP in the third quarter - underscored the importance of Britain voting to remain in the EU on June 23. "Today's figures expose the real danger of economic uncertainty and shows that now is precisely not the time to put our economic security at risk by leaving the EU," Osborne said.
Bank of England Governor Mark Carney has said a vote to leave the bloc would test the "kindness of strangers" who cover Britain's balance of payments shortfall. Sterling has weakened sharply this year on concerns about the referendum. But campaigners for Brexit, as leaving the EU is called, said Thursday's data showed Britain would flourish on its own because it would no longer have to fund the EU's budget and the scale of its trade gap - a big part of the current account deficit - meant other EU countries would be keen to do a deal to keep their exports flowing.
"These figures blow a hole in the remain campaign's key tactic: to do down Britain and wrongly suggest that we can't get a free trade deal after we say no to Brussels," Matthew Elliott, chief executive of Vote Leave campaign group, said. Most economists say Britain's economy would suffer at least a short-term hit to growth if voters decided to leave the EU, and that uncertainty over the referendum will affect the confidence of consumers and businesses before June.
A survey published on Thursday showed a measure of consumer confidence remained stuck at its lowest level in more than a year, hurt by worries about the EU referendum and the euro zone's persistent economic problems. For 2015 as a whole, the current account deficit hit a record 5.2 percent of GDP. The Office for National Statistics' figures showed a fall in income from British direct investments abroad in the fourth quarter while more money flowed out to foreign investors in Britain, a reflection of Britain's stronger economic growth.
Britain's economy grew by a quarterly 0.6 percent in the October-December period, higher than a previous estimate of 0.5 percent, helped by the huge services sector. Growth in 2015 as a whole was revised up slightly to 2.3 percent, faster than most of the world's other rich countries. Consumer demand remains the main driver of growth and spending by households kept up its pace in the fourth quarter. BoE data showed growth in consumer lending over the 12 months to February was its strongest since 2005.