UK current account deficit remains near record high in first quarter

The UK’s current account deficit remained near a record high in the first quarter due to shortfalls in trade.

The deficit was £32.6bn in the three months to March, down slightly from the upwardly revised £33.96bn in the fourth quarter, the Office for National Statistics said. Economists had expected a deficit of £28bn.

The overall current account deficit in 2015 was revised up to a record £100.3bn from the previously reported £96.3bn.

“The first quarter 2016 current account deficit of £32.6bn is highly uncomfortable for the UK economy, especially given that the markets are looking at the UK with a jaundiced eye following the vote to leave the European Union,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“The hope will be that the marked weakening of sterling will boost exports (although much will depend on how much European and global growth is hit by Brexit) and that this helps to bring down the trade deficit along with likely weakened domestic demand reducing imports.”

The ONS also released economic growth data which showed gross domestic product rose 0.4% in the first quarter, in line with expectations. Growth on the year was confirmed at 2%, also in line with expectations.