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Current account gap up to £20.7bn

THE UK racked up a current account deficit of £20.7 billion in the third quarter, the worst figure since the third quarter of 1989, as the country's export performance continued to disappoint, official figures have revealed.

The current account deficit was much higher than that of £6.2bn in the second quarter , and way ahead of a consensus City forecast of £13.85bn. It equated to 5.1% of gross domestic product.

The balance of payments figures, published yesterday by the Office for National Statistics, showed the UK's trade deficit widened to £10bn in the third quarter from £5bn in the preceding three months.

The UK's income balance moved from a £6bn surplus in the second quarter to a £3.7bn deficit in the three months to September.

The ONS noted that UK earnings on direct investment abroad decreased by £6.9bn between the second and third quarters. The deterioration in the income balance also reflected higher profits for foreign-owned UK private non-financial corporations.

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "The current account data for the third quarter of 2013 are truly dire."

Separately, the ONS yesterday confirmed its earlier estimates that UK gross domestic product had risen by 0.8% in the third quarter.

However, upward revisions to prior quarters meant GDP in the third quarter was up 1.9% on the same period of last year. The ONS had estimated previously that GDP in the three months to September was up 1.5% on the same period of 2012.

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