the uk’s large current account deficit could damage market sentiment towards the country if the economic environment deteriorates, the Bank of England said.
Minutes from the BoE’s Financial Policy Committee meeting on March 24 showed members were worried about Britain’s current account deficit, noting it was high by historical standards.
“(The) current account deficit was large and could, in adverse circumstances, trigger the deterioration in market sentiment towards the United Kingdom,” the minutes said.
The deficit narrowed as a percentage of the economy in the fourth quarter after matching its record high in the previous three months. But for 2014 as a whole, the shortfall widened to 5.5 per cent of GDP, the largest deficit since records began in 1948.
“The committee agreed to keep their assessment of this risk under close review and would monitor the maturity and liquidity of the financing of the deficit.”
FPC members said “fragile” market liquidity was also a concern.