The Changing Structure of the UK Economy: Implications for the Current Account

In common with other developed countries, the UK has seen the relative importance of the service sector grow, accounting for an ever greater share of employment and output — a trend that has accelerated over recent decades. At the same time, globalisation means that international trade is of increasing importance as a share of UK expenditure. With the traded goods sector dwindling in importance, what are the implications for the current account? This paper examines the changing structure of the UK economy and prospects for the current account. Although the current account is expected to remain in deficit for the foreseeable future, the size of the deficit is likely to remain manageable as growing surpluses from trade in services and investment income offset a widening goods deficit.