The UK needs to invest more, train up its workers and become a more competitive economy to try to bring down its very large current account deficit, the International Monetary Fund (IMF) has warned.
Analysts studied 28 of the world’s largest economies and found the UK has the biggest deficit, running at 4.4% of national income or Gross Domestic Product (GDP), increasing UK debt.
The current account deficit is made up of the trade deficit – as the UK imports more than it exports – combined with the balance of the flows into the economy from overseas investments, and out of the UK to foreign investors.
The UK deficit is the largest, followed by Turkey’s 3.7%, Mexico’s 2.7% and Australia’s 2.6% The US deficit has dropped to 2.4% from more than 6% in the pre-crisis years. By contrast, Singapore’s surplus of 19% is the largest with Switzerland’s at 10.7% and Germany at 8.3%.
“Structural reforms focused on broadening the skill base and investing in public infrastructure should boost productivity, improving the competitiveness of the economy,” the IMF said.
Kenneth Gibson commented:
“Last year the UK’s GDP was £1,940 billion, so a 4.4% deficit is around £85.4 billion; a colossal sum of money.
“The SNP Government has long argued for investment in infrastructure, skills and the need to grow the economy and we are working hard to do that with the powers we have, not least through initiatives such as the Scottish Growth Fund.
“Enhancing skills, investment and productivity - which has grown 9.4% in Scotland since 2007 under the SNP but only 0.1% in the UK over the same period - is clearly the route to a more competitive, prosperous economy moving into surplus and thereby helping to reduce the UK’s near £1.8 trillion debt.”