WIREDGOV

In the latest issue of the National Institute Economic Review, Philip Lane, Professor of Political Economy at Trinity College Dublin and the newly appointed Governor of the Central Bank of Ireland, examines the mechanics of the UK current account deficit from a financial perspective.

The UK has experienced an extraordinary deterioration in its current account balance in recent years. The primary factor behind this deterioration is a drop in net income on foreign direct investment; the trade balance has been relatively stable.

Professor Lane argues that financial engineering (with little net impact on the underlying international investment position for the UK) may have played a large part in this decline. This may mean that concerns about the sustainability of the current account position may have been overstated.

More broadly, the recent UK experience provides another one more illustration of the challenges posed by the financial operations of multinational corporations in the interpretation of balance of payments data in an era of financial globalisation.

Notes for editors:

This press release is based on an article entitled “A financial perspective on the UK current account deficit”, written by Philip R. Lane, published in the National Institute Economic Review No. 234 November 2015.

This is a quarterly, peer reviewed, economic and social sciences journal. The full Review is published from midnight on Wednesday 4 November.

For a full copy of this paper, please contact the NIESR Press Office:
020 7654 1923 / press@niesr.ac.uk  

To discuss the article, please contact Jonathan Portes:

• j.portes@niesr.ac.uk or  07766 441148

• http://www.niesr.ac.uk or by contacting enquiries@niesr.ac.uk Switchboard Telephone Number: +44 (0) 207 222 7665