View from City Road: Current account numbers go hazy

Some economists fear that a sterling crisis may develop next year if the current account deficit widens significantly. But even if sterling is dumped it might all be for nothing. The latest trends in European Union trade statistics suggest that it may be some time before we know whether to worry at all about our deficit.

The switch from customs-based trade data to VAT returns has thrown the figures throughout the EU into chaos. Companies are slow to adjust to the new reporting systems, which were previously serviced by importing and exporting agents. Now firms must report on the basis of their own VAT returns, which has slowed the arrival of reliable data.

The Central Statistical Office will tomorrow publish the first complete trade figures for the year to August. But it admits that they will be highly provisional because of problems of seasonal adjustment. It is a truism that there cannot be trouble-free seasonal adjustment until the system has run long enough - and that might take three years.

In the meantime, the CSO is relying on patterns in earlier years while trying to allow for changes in the timing of incoming data. There will be more revisions.

The figures are also the source of export and import prices, used to help prepare industrial production volume figures. This casts doubt on the reliability of recent production figures and estimates of the strength of recovery. It may be some time before the markets can again justify a sterling crisis on the basis of trade data.