Overshadowed by news of the UK’s current account gap yesterday was the improvement in the economy’s growth rate.
Gross domestic product (GDP) is now estimated to have increased by 2.3% last year, instead of the 2.2% that had been the original estimate.
The Office for National Statistics (ONS) data on the trade deficit is certainly worrying: the current account deficit rose to £32.7 billion or 7% of GDP in the fourth quarter.
The so-called current account deficit is the gap between money flowing in and out of the economy and its rise follows a fall in investment into the UK from abroad. Some economists fear this would reach unmanageable levels after a Brexit.
But there is consolation to be had in the growth rate. For two years, the UK has been at or near the top of EU countries in terms of GDP growth. This is not entirely due to the fact Britain stayed outside the troubled euro, because the most successful economy in the EU has been the Republic of Ireland’s during those two years. But part of the Republic’s success is due to the fact that it has an economy that is closely linked to the British one.
Britain did enjoy markedly higher growth in 2014 and 2015 than the other two big EU nations, Germany and France. They are more reflective than Ireland of a eurozone that seems moribund.
In Northern Ireland, we are fortunate to be part of a UK economy and to be funded by a Treasury that is so wealthy.
But there are, even so, major concerns in the British economy. Debt is too high and it is rising at a worrying rate.
The public will not accept cuts to education, health or defence, which leaves little room for manoeuvre. Iain Duncan Smith’s departure will make welfare cuts harder. Our only hope of escaping debt in those circumstances is a growth rate that outstrips the rising debt.
The current account deficit figures are not good. The GDP data gives some grounds for hope.