UK: Why the horror may go out of the balance of payments story.

David Smith discerns distinct shifts that could mean that the old disorder changeth.

Britain's balance of payments has improved dramatically this year. Two years ago, monthly deficits on the current account reached the alarming level of more than £2 billion a month, and the balance of payments had emerged as a constraint on the economy as serious as at any time in the post-war period.

Now, the deficit is, like inflation, no longer on the liabilities side of the economy's balance sheet. This year, Britain will be in the red by the not inconsiderable sum of £5 billion or so. But this is small beer when set against the £20.4 billion deficit of 1989. Back in June, the current account nudged into surplus for the first time since the spring of 1987. lt was a freak occurrence but to go from a £2 billion deficit to a surplus, and all in the space of two years, underlines how times have changed.