U.K. "Twin Deficits" Increases

In contrast to Ireland, the U.K. is seeing both its budget- and current account deficits increase. The budget deficit was £17.5 billion in November, up by £1.2 billion compared to November 2011. For the April-November period as a whole the deficit rose by £9.3 billion to £92.7 billion. Not much of the alleged "austerity" can be detected in the actual numbers, in other words...

Partly as a result of the higher budget deficit and partly because of the overvalued pound and negative real interest rates, the current account deficit rose from £8.7 billion in Q3 2011 to £12.8 billion. During the latest year, the deficit was £47.7 billion, or about 3.1% of GDP, up from £24.7 billion or 1.6% of GDP.