Gkionakis: Brexit's Loss of 'Hot Money' Hurts Pound

The video discusses the UK's economic outlook, focusing on GDP growth and the widening current account deficit. It highlights that the deficit is driven by primary income balances rather than trade. The impact of Brexit on financial flows is examined, noting the uncertainty and potential reversal of portfolio flows, which could negatively affect sterling. Inflation concerns are addressed, emphasizing the challenges of imported inflation and the Bank of England's approach to managing it.

What is the primary driver of the UK's current account deficit?

• Primary income balances

• Consumer debt

• Trade balance

• Government spending

How has the UK's current account deficit been primarily financed in recent years?

• Government bonds

• Portfolio flows

• Foreign direct investment

• Export revenues

What is a potential consequence of the reversal of portfolio flows in the UK?

• Strengthening of the British pound

• Increased foreign investment

• Improved trade balance

• Negative impact on the British pound

What is a concern related to inflation in the UK?

• Stable inflation rates

• Decreasing input prices

• Imported inflation

• Deflationary pressures

How does the Bank of England plan to handle the expected rise in inflation?

• By ignoring it

• By increasing interest rates immediately

• By overreacting to it

• By looking through it