UK Current Account Deficit Widens

123jump.com Staff
23 Dec, 2008
New York City

UK current account deficit in the third quarter rose to 2.1% of gross domestic product or

[R]1:00PM New York, 6:00PM London- Service sector output increases 0.6% in October. Current account deficit tops £7.7 billion in Q3 of 2008.[/R]

U.K. stocks rose marginally after service sector output rose in October from September. Gains were however limited by the news that the country''s current account deficit in the third quarter increased to £7.7 billion.

In London trading FTSE 100 index rose 0.2% or 6.82 to 4,255.98.

Of the FTSE 100 index stocks, 63 rose, 35 declined, and 14 were unchanged. Invensys Plc led advancers in the index shares with a rise of 5.2%.

Service Sector Output Increases 0.6% in October

The Office of National Statistics reported today that service sector output soared 0.6% between September and October on a rise in business and financial services.

However, in the three months to October the index for output of service sector declined 0.2% from the previous quarter.

Output from distribution declined by 2.5% in the quarter to October from the previous three months and output from hotels and restaurants increased 0.2% in the period from the previous quarter.

In addition, transport, storage and communication edged up 0.4% and output from business services and finance decreased by 0.2% in the review period.

Q3 Current Account Deficit of £7.7 billion

Separately, the ONS reported today that the current account deficit was £7.7 billion in the third quarter of 2008, or 2.1% of gross domestic product.

Second quarter GDP was revised to a decline of 1.8% of the GDP to £6.4 billion.

The trade deficit in goods in the third quarter stood at £23.6 billion from £23.4 billion the previous quarter. Exports increased by £1.9 billion, while imports advanced by £2.1 billion.

Deficit on trade in oil widened to £1.7 billion from £1.6 billion in the previous quarter, while oil exports rose by £200 million and oil imports rose by £300 million.

The ONS said trade in service surplus eased to £11.5 billion in the third quarter, as exports fell by £100 million to £40.9 billion.

However imports increased £500 million to £29.4 billion on increased imports of other business services.

Net Mortgage Lending Rise by £2.9 billion in November

British Bankers Association reported that net mortgage lending gained by £2.9 billion in November but below the average for the previous six months.

Home-loan approvals fell 61% to 17,773 in November from a year ago.

Consumer credit increased by £200 million and personal deposits rose by £3.9 billion as products offered by the high street banks attracted funds.

Statistics director David Dooks said, “Volumes of mortgage approvals reached new lows and, with house prices still falling, the encouragement of lower costs had not filtered through by the month-end, largely because people remain concerned about the impacts of the rapidly slowing economy on their personal finances.”

Gainers & Losers

Invensys Plc led advancers in the FTSE 100 index shares with a rise of 5.2% followed by increases in Prudential Plc of 5.1%, in Royal Bank of Scotland of 4.6%, in Aviva Plc of 4.2%, and Hammerson of 4%.

Legal & General Group led decliners in the FTSE 100 index shares with a drop of 6.2% followed by losses in Standard Life of 3.8%, in Vodafone Group of 3.5%, in Marks & Spencer of 3.4%, and RSA Insurance Group of 2.7%.