Britain's current account deficit widened way more than expected in the fourth quarter, figures released by the Office for National Statistics (ONS) on Thursday (31 March) showed.
According to the ONS, the current-account deficit now stands at £32.7bn (€41.4bn, $47bn) for the fourth quarter, sharply higher than the revised £20.1bn recorded in the previous three months and way larger than the £21.2bn expected by economists.
More worryingly, the figure represented the biggest deficit as a share of gross domestic product (GDP) since records began in 1955. The deficit now amounts to 7% of Britain's GDP, compared with 4.3% in the previous three months.
George Osborne described the figures as a reminder that Britain remains exposed to risks deriving from worldwide economic slowdown.
"The UK is not immune to risks in the global economy as slowing global growth weighs on our outlook," the Chancellor said. "Today's figures expose the real danger of economic uncertainty and shows that now is precisely not the time to put our economic security at risk by leaving the European Union."
Analysts attributed the jump in current account to a marked increase in the total trade deficit, which increased to £12.2bn in the fourth quarter from £8.9bn in the previous three months and £4.7bn in the second quarter – which was the lowest total trade deficit since the third quarter of 2000.
UK exports of goods and services fell 1.1% quarter-on-quarter in the fourth quarter to £126.0bn. In contrast, UK imports of goods and services rose 1.4% quarter-on-quarter in the fourth quarter to £138.2 billion.
However, a sharp jump in the shortfall in the UK's net primary income account in the fourth quarter of 2015 was an even greater contributory factor to the dismal fourth quarter current account performance. The deficit in the net primary income account jumped to a record £13.1bn in the final three months of 2015 after narrowing to £5.8bn in the third quarter from £8.1bn in the previous three months.
"The renewed marked widening in the current account deficit in the fourth quarter is a particularly uncomfortable development for the UK economy," said Howard Archer, chief UK and European economist at IHS Global Insight. "While the markets have so far taken a relatively relaxed view of the UK's elevated current account deficits, it could become an increasing problem if the markets lose confidence in the UK economy for any reason."