Douglas Carswell

19 NOV 2015

Our current account deficit is as worrying as our budget deficit

Britain is a chronic borrower. Not just the Government, but the whole country. We are buying more than we sell, and making up the difference with debt. This is unsustainable.

Our current account deficit – the amount that the value of our imports exceeds the value of our exports – is the largest of any developed country as a share of GDP. In the last quarter, it was equivalent to 3.6% of national income, or £16.8 billion. Think about that for a second: we spent £16.8 billion more than we earned just this past summer.

The amazing thing is that 3.6% is an improvement. Last year, Britain's current account deficit was 5.5%, or £97.9 billion – an all-time record. But if you think we're moving in the right direction, don't get your hopes up: this quarter, it is set to widen again.

Buying more than we earn is made possible by enormous borrowing. It means that people across Britain are drowning in debt.

It is also funded by the sale of British buildings and businesses to foreign buyers. Wondering why foreign investors are allowed to buy London properties and drive up house prices? That's part of what's paying for our imports.

High borrowing is the result of low productivity. Exorbitant energy costs, caused by green taxes, are making our exports uncompetitive. Lax monetary policy is pumping money into assets instead of innovation.

We are also held back by being tied to the world's only declining trading bloc: the EU. During the recent visits of the Indian and Chinese leaders, the Government touted our trade with the far east. But non-EU Switzerland, with a population eight times smaller than ours, exports almost twice as much as us to China, and over four times as much to India. Switzerland also has a bilateral free trade deal with China, and is in the process of negotiating one with India – something that we, as EU members, can't do.

The EU is holding us back from doing what we're best at. Britain specialises in services; yet EU diktats make exporting services to the rest of the world much more difficult than it needs to be.

Politicians often talk about "rebalancing the economy." But balance won't boost our exports. What we really need is to do is focus on our strengths, and exploit our comparative advantage. To do that Britain – not Brussels – needs to be in control.

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