This is Spud levels:
According to the latest national accounts, published last week, Britain’s current account deficit widened in the first quarter of this year to an astonishing 8.3pc of Gross Domestic Product, easily the biggest such deficit ever.
In layman’s terms, what this means is that overall expenditure in the UK is exceeding national income by nearly a tenth of the value of the entire economy.
All other things being equal, there would be nothing left at all in the national coffers in little more than ten years from now if we were to carry on like this.
Fortunately, the balance of payments doesn’t work quite like that; the deficit is paid for by inflows of capital from overseas,
Trade deficits are financed by capital surpluses. So, foreigners are investing more in the UK than we are outside it. Note that quite a few economists would argue that this is the actual cause here – the investment flows cause the trade ones.
GDP is £2 trillion and change a year, 10% of that is £200 billion, the national wealth (household that is) is £15 trillion. Take us quite a long time to sell all of that.
And we do create new wealth all the time as well. What we actually do is sell some portion of the newly created….