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A discussion of the UKs current account deficit and its implications for the private citizen
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| Submitted: Mon Jun 19 2006
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A discussion of the UKs current account deficit and its implications for the private citizen Traditionally, Britain has been concerned with its BOP "problem", most clearly demonstrated by the "stop-go" cycles of the Bretton Wood era. The record CA deficit of the late 80's and the emergence of a BOT deficit in manufactures in the early 80's for the first time in British economic history has renewed interest on the subject. During the last 2 or 3 decades, however, the importance and even the very existence of a BOP "problem" has been disputed : Free floating exchange rates, extensive international capital movements and a single currency have been proposed as ways to eliminate the BOP problem. More fundamentally, many people, including the ex-Chancellor N. Lawson, have argued that, provided the public sector is in equilibrium, CA deficits are not a problem at all since they simply represent optimising behaviour decisions of the...
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