Almost half a trillion pounds has “gone missing” from Britain’s finances, new figures reveal.
A revision of the country’s accounts by the Office for National Statistics shows that the UK’s net international investment position has collapsed from a surplus of £469bn to a net deficit of £22bn.
The ONS ‘blue book’ overestimated the scale of financial assets Britons own overseas and the depth of foreign investment in the UK.
“Half a trillion pounds has gone missing,” said Mark Capleton, the UK rates strategist at Bank of America.
Other economists have warned that foreign-owned pension funds and sovereign wealth funds are also very reluctant to invest their clients’ money in sterling stocks and bonds.
The impasse over Brexit is seen as a major roadblock to foreign investment, with finance firms unwilling to commit in such an uncertain political climate.
That said, the FTSE is in rude health, opening almost 12 points higher on Monday morning.
The ONS ‘blue book’ figures will be another sobering warning to the chancellor, Philip Hammond, ahead of next month’s Budget.
And it will only serve to add another layer of pressure on Theresa May, the prime minister, and her Brexit secretary, David Davis as they sit down for dinner this week with European Council president Jean-Claude Juncker and his Brexit lead, Michel Barnier.
The four of them will attempt to find a way of moving the stalled talks forward as the UK and EU struggle to get past the issues of the divorce bill, citizens’ rights and the Irish border.
The EU has insisted that until “sufficient progress” is made in these areas, it will not begin discussing the UK’s post-Brexit trade position.
All 28 national leaders will meet on Thursday in Brussels to discuss EU President and summit host Donald Tusk’s schedule for Europe’s post-Brexit future, among other issues.
May will then be asked to leave after breakfast on Friday so the 27 other leaders can weigh up Brexit.
Over the weekend, Labour’s shadow chancellor John McDonnell said there would be enough MPs to thwart Theresa May’s “no deal” scenario and prevent the UK from leaving the bloc without an agreement in place.
Pro-Europe MPs fear leaving without a deal would be catastrophic for the country, while Brexiteers believe the UK would be successful without or with a deal.