Seema Malhotra – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Seema Malhotra on 2016-01-22.

To ask Mr Chancellor of the Exchequer, what assessments he has made of the effect of the level of the current account deficit on the future strength of the pound sterling.

Harriett Baldwin

The widening in the UK current account deficit in recent years has been driven by a deterioration in the UK’s net investment income from abroad, while the trade deficit has continued to improve. The Office for Budget Responsibility expect factors that have depressed the returns on the UK’s net assets, such as the relative weakness in economic activity in the UK’s trading partners, to recede. The current account deficit is forecast to narrow to -2.1 per cent by 2020, limiting any impact on the exchange rate. Furthermore, the government’s plan to complete the repair of the public finances will support a gradual narrowing of the current account deficit.