Sustainable Rebalancing In UK And Global Economy Depends On Structural Forces: BoE

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Sustainable rebalancing in the UK and the global economy depend on structural forces, including the extent to which consumers in deficit nations remain restrained and domestic demand in surplus countries pick up, the latest Quarterly Bulletin from the Bank of England showed Monday.

Sterling depreciation improved the UK's net external asset position and, alongside slowing demand helped support net trade, narrowing the UK current account deficit. This shift was reflected in other nations, resulting in some partial correction of global imbalances.

Increased supply of government bonds as a result of expansionary fiscal policies followed by deficit nations provided an ongoing source of asset supply to meet the investment demand from surplus nations.

"To the extent that savers in surplus countries may become more reluctant over time to invest funds in deficit-country government bonds this would tend to raise the cost of borrowing in deficit countries," the BoE said.

Sustainable rebalancing in the UK and the global economy depend on structural forces, including the extent to which consumers in deficit nations remain restrained and domestic demand in surplus countries pick up, the latest Quarterly Bulletin from the Bank of England showed Monday. (Market News Provided by RTTNews)