sonyboy812 asked:
I read in an economic text book that a current account deficit is generally due to mainly transactions made by private individuals and companies trading. It goes on to say “a current account deficit is NOT a government deficit in any sense”.
I read in an economic text book that a current account deficit is generally due to mainly transactions made by private individuals and companies trading. It goes on to say “a current account deficit is NOT a government deficit in any sense”.
Thus, if UK consumers buy more from China then they export to China, and assuming the UK have paid for the goods without borrowing money, Why is it a deficit then? UK could be using their savings. All it tells us is we spent more than they did. At the end of the day, we are shifting money (wealth) to China.
Tammy
Juanita
True, in this case China is the financier as the payments are not immediate, it is measured by the current account. It is the relationship of the transfer of wealth.