Features of British current account deficit

Last year, the current account deficit of the United Kingdom rose to 5.1 percent of GDP. This difference between income from abroad of British exporters and investors, on the one hand, and funds earned in the UK by foreign companies in the UK, the other is at a record high level in the postwar history of the country, notes Ian Stewart of Deloitte.
This undermines the idea of ??a balanced British economy, driven by exports and investment. Sobering to see that the current account deficit was higher than during the crisis years like 1947, 1966, 1967 and 1976
The difference this time is that the deficit is generated by the melting of the British investment income, where before there was a surplus. In the past, the reason was the growth of imports and rising trade deficit. But by 2012 the trade deficit is generally stable, and the trade surplus on investments offset the deficit on goods.
This time the problem is created by the profits from foreign investments, dividend payments and rents. In 2011, Britain received a 54 billion liras more foreign assets than is paid to foreign investors who hold British assets. In 2014, this surplus has dwindled to only 2 billion pounds. This is partly due to the reduction of British investments in businesses with raw materials abroad.
Current account deficit is offset by the corresponding amount of capital flows. These capital or deposited in banks or used to purchase assets - mainly shares, companies, real estate and government bonds.
Britain's current account deficit is financed through the sale of British assets of foreign entities and British investors sell foreign assets and return funds back to the island.
Key to the current account deficit of the United Kingdom, the net foreign assets shrank over the years.
Data from the central bank show that in the 19th century to the 20s of the 20th century the United Kingdom maintained a current account surplus, by expanding the ownership of foreign assets. The country is enriched through the developments in other countries, they are providing the capital and in return received income.
After World War II, however, things change. Today the value of the assets which foreign persons hold, is 450 billion liras more than that of the assets owned by British companies and investors abroad. This is equal to about 25% of British GDP.