A housing bubble and government (over)spending is not just an American problem. The Blair legacy is now taking its toll and Gordon Brown is going to have more explaining to do.
The UK's current account deficit leapt by almost 50 per cent in the third quarter, hitting a record £20bn and raising fresh concerns about the stability of the country's economy.
The deficit was almost twice as large as expected, as the strong pound saw the level of imports far exceed exports, and the levels of investment fell.
More troubling news on the UK economy, after the jump.
Public sector borrowing also hit a new high of £11.2bn last month, up from £9.1bn at the same time last year, while gross mortgage lending fell by 7.7 per cent during the month, confirming the slowdown in the housing market.
Jonathan Loynes of Capital Economics said the data showed the UK economy to be "dangerously unbalanced". "This morning's flurry of UK data paints a worrying picture of a dangerously unbalanced economy," he said. "The UK's external position now looks pretty much as bad as that in the US, suggesting the pound needs to fall sharply like the US dollar."
Peter Spencer, chief economic adviser to the Ernst & Young ITEM Club, added: "What is really shocking about these figures is that they reveal that the Exchequer was running a large current deficit before the credit crisis hit home, when the economy was doing very well and it should have been showing a large current surplus.
"Now, the economy is slowing sharply and the public finances will deteriorate equally rapidly. The first hit will come in February when the January tax receipts will be published. These will be well down on last January's figure, which was of course swollen by huge City bonuses and profits last year. We have revised our forecast of this year's current deficit up to £16bn, twice the Treasury pre-Budget report forecast of £8bn. As if the Chancellor had not got enough problems on his plate already."
