Britain bumps up previous estimates for current account deficit

By Andy Bruce
FILE PHOTO: People walk accross a plaza in the Canary Wharf financial district, London, Britain, January 9, 2017. REUTERS/Dylan Martinez/File Photo

By Andy Bruce

LONDON (Reuters) - Britain's current account deficit, one of the weak points of its economy, was bigger than previously thought in the years up to 2012, according to new estimates from the Office for National Statistics on Wednesday.

The figures showed British companies had paid out more interest to foreign holders of corporate bonds than initially estimated, resulting in a larger current account deficit.

The deficit, one of the biggest among advanced economies, has been in the spotlight since June's Brexit vote.

Bank of England Governor Mark Carney said in the run-up to the referendum that Britain was reliant on the "kindness of strangers", highlighting how the country needed tens of billions of pounds of foreign finance a year to balance its books.

The ONS said the current account deficit for 2012 now stood at 4.4 percent of gross domestic product, compared with 3.7 percent in its previous estimate.

The ONS revised up the deficit for every year dating back to 1998 by an average of 0.6 percentage points. The biggest revisions occurred from 2005 onwards.

Last month the ONS said Britain's current account deficit tumbled to 2.4 percent of GDP in the final three months of 2016, less than half its reading of 5.3 percent in the third quarter.

Revised data for 2012 onward is due on Sept. 29, and it is unclear if Wednesday's changes point to significant further upward revisions, as British corporate bond yields have declined markedly since 2012 and touched a new low in mid-2016. <.MERUR00>

The ONS also revised up its earlier estimates of how much Britons saved. The household savings ratio for 2012 rose to 9.8 percent from 8.3 percent previously, with a similar upward revision for 2011.

The ratio for Q4 2016, which has not yet been revised, stood at its lowest since 1963 at 3.3 percent.

The ONS said the changes reflected changes to the treatment of self-employed people paying themselves dividends from their own companies, as well as separating out the accounts of charities, which had previously been included with households.

More recent years may produce similarly large revisions to the savings ratio. Around 40 percent of the roughly 2.2 million new jobs generated since the beginning of 2008 fell into the self-employed category.

(Reporting by Andy Bruce; Editing by Alison Williams)