Don't worry, UK Deficits are Financed with Ease - BTMU
Analysts at Bank of Tokyo Mitsubishi explained that the current account deficit has not garnered too much attention in financial markets in part due to the evidence from the financial account that shows very strong foreign direct and portfolio investment inflows to the UK by foreign investors.
Key Quotes:
"The total 2015 current account deficit of GBP 96.3bn was more than financed by the combined FDI portfolio inflow from abroad of GBP 292.2bn – with FDI inflows of GBP 37.7bn and portfolio inflows of GBP 254.5 (predominantly debt securities). So certainly no problems there."
"Indeed that financing was reinforced on a net basis with UK investors repatriating from abroad both on direct investments and portfolio investments. In Q4, the FDI inflow from abroad did dry up (early signs of ‘Brexit’ uncertainty?) but equity and debt securities inflows picked up and totalled GBP 77.7bn. So there is still evidence of the UK’s large deficits being financed with ease."
(Market News Provided by FXstreet)
