UK current account deficit ballons

Failing banks, a mountain of personal sector debt, a crashing housing market, and now a massive current account deficit - the economic problems confronting the UK just keep piling up. All the UK needs now is a recession, and we would have a perfect storm.

During the third quarter of this year, the UK imported £20 billion more than it exported. That shocking number is equivalent to 5.7 per cent of gross domestic product (GDP).

The deficit is the inevitable consequence of the debt-driven consumer expenditure. UK households have borrowed too much and spent the cash on imports.

There is only one way out of this mess. People just have to stop borrowing and start saving. This will lead to a slowdown in growth, but to delay the correction would be to store up even greater problems in the future.