EFTA Document EFTA01359484

3) Absent rate support, sterling much more vulnerable to twin deficits and expensive valuation. A robust recovery and high interest rates relative to European peers has helped to finance a very large deterioration in the UK's current account deficit since 2011. As we have previously argued, much of this is structural; a result of falling profitability in the UK's highly concentrated foreign direct investments dragging on the income balance. If rate support were to fade, slowing foreign capi