ONS admits multibillion pound error over current account deficit

The Office for National Statistics (ONS) has admitted that a "processing error" has resulted in a multibillion pound overestimate of the UK's current account gap with the rest of the world.

It has discovered a mistake in the way it accounted for imports and exports of "erratic" goods such as gold, silver, precious stones, aircraft and ships.

That means the current account deficit - the gap between money flowing into and out of the country - is not as bad as was thought.

There were warnings about the scale of the current account deficit - which is large by international standards - in the run-up to the referendum.

Bank of England governor Mark Carney said concerns about Brexit could test the "kindness of strangers" that the UK relies on to fund the shortfall.

The full revisions cover 2015 and the first half of 2016 and in total mean the UK current account deficit was £10bn smaller than previously thought for that period.

It is £6.7bn smaller for last year, and £3.3bn for the first half of this year.

The revised figures show that the current account deficit for the second quarter of this year was 5.4%, not 5.9% as previously thought.

But the figures also suggest that this improvement will be partially reversed by revisions for the third quarter.

The gap (Frankfurt: 863533 - news) between imports and exports - formally referred to as the trade deficit - has widened in the three months to the end of September and reached a record £17bn, which is £5.9bn worse than initially thought.

Fully updated figures will be published by the ONS on 23 December.

The ONS said its headline estimates of GDP were not affected.

The current account deficit is not the same as the Government's fiscal deficit - the gap between its spending and revenues which needs to be made up by borrowing.

In a report earlier this year, former Bank of England deputy governor Charles Bean said many UK statistics were "deficient" and the ONS needed to improve its capabilities.