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AS Macro Key Term: Current Account Deficit

Geoff Riley

2nd April 2011

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A current account deficit is the amount by which money relating to trade, investment etc going out of a country is more than the amount coming in. The current account is made up of balances in trade in goods and services, net incomes from overseas investments and net transfers. A current account deficit implies a net reduction of demand in a country’s circular flow. The UK’s current account position is shown in the charts below:

UK Current Account as a % of GDP, quarterly data

Data from Timetric.

To view this graph, please install Adobe Flash Player.

BoP: current account balance as per cent of GDP : quarterly from Timetric

Annual data for the UK current account

Data from Timetric.

To view this graph, please install Adobe Flash Player.

BoP: current account balance as per cent of GDP : yearly from Timetric

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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