LONDON (Reuters) - Britain’s large current account deficit is showing worrying signs of becoming increasingly financed by short-term inflows of foreign capital, rather than asset sales, a Bank of England financial regulator said.
Martin Taylor, an external member of the BoE’s Financial Policy Committee (FPC), told lawmakers that measures of financial stability were “giving very contradictory signals at present: some ice-cold, some very hot”.
Taylor welcomed a fall in Britain’s current account deficit since June 2016’s Brexit vote but said it was still “very high” and that it was concerning that it was increasingly financed by asset sales.
He also said there was pressure in Washington and parts of Brussels to weaken leverage standards for banks.
“I am bothered about the European Commission’s plans, which seem to me imperfect, and, if they are subject to maximum harmonisation, even dangerously imperfect,” he said.
Reporting by David Milliken, editing by Andy Bruce