Nation's current account
A nation's current account measures the flows of actual goods and services in and out of the country
A country's balance of payments - its financial situation relative to the world - is made up of the current account and the capital account.
The current account measures the flows of actual goods and services in and out of the country, recording earnings from exports minus expenditure on imports. If a country sells more by value than it buys, it is running a current-account surplus. If the reverse is true, it will have a deficit.
To make up the difference, it will have to sell assets, encourage foreign investment, or increase its foreign debt. In theory, if a country is running a deficit, demand for its currency will fall (and so will its value), making imports more expensive and exports cheaper, balancing things out.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
ONS wage growth data puts Bank of England UK interest rate cuts into doubt, analysts warn
News ONS wage growth data has shown earnings are continuing to rise at an inflation-busting rate. It means cuts to the base rate may come later in the summer
By Henry Sandercock Published
-
Most expensive street in Britain to buy on has houses with '£10m average asking price', Rightmove finds
News Rightmove found Buckingham Gate, close to Buckingham Palace, was the most expensive street in the country. Do you live near one that's been included on the list?
By Henry Sandercock Published