UK Records Smallest Current Account Deficit in a Year in Q3 2025

LONDON | EcoPulse24

The current account in the United Kingdom showed a remarkable improvement during the third quarter of 2025, with the deficit narrowing to approximately £12.1 billion, equivalent to 1.6% of GDP, compared to a revised deficit of £21.2 billion in the second quarter, and performing much better than market expectations of a deficit exceeding £21 billion.

This level marks the lowest current account deficit since the third quarter of 2024, primarily driven by a significant improvement in the primary income balance, which reduced its deficit to £1.9 billion from £8.4 billion in the previous quarter, according to official data.

This improvement came as a result of:

• Increase in revenues from foreign investments by approximately £5.5 billion.
• Decrease in payments to foreign investors by about £1.1 billion.

Data also showed a reduction in the goods trade deficit to £58.9 billion compared to £60.0 billion in the second quarter, while the services sector surplus rose to £52.8 billion from £51.3 billion, continuing to support the external balance of the UK economy.

In contrast, the secondary income deficit widened slightly by £0.1 billion to £4.1 billion, equivalent to 0.5% of GDP, compared to £4.0 billion in the previous quarter.

This performance reflects a relative improvement in the external position of the UK economy, supported by the strength of the services sector and a reduction in pressures associated with investment income flows, as markets continue to monitor growth and monetary policy trends in the coming months.