Recently the US the current account has reached an unprecedendented level, reaching nearly 6% of GDP. Despite the record levels of deficit many in the US administration have argued that there is nothing to worry about, confident the US will continue to recieve capital inflows to finance the deficit.

In the UK the Balance of Payments on current account has been in persistent deficit for the past 19 years. However compared to the US it is a relatively smaller % of GDP (2.5%)

This essay examines whether economists should be concerned with a current account deficit.

* Current account measures

i) Balance of trade in goods

ii) Balance of trade in services

iii) Net Investment incomes

iv) Net Current Transfer