The current account - the financial measure of all Britain's dealings with the rest of the world - fell £11 billion into the red for the second quarter running in the final months of last year.
That was equivalent to 3.6 per cent of the gross domestic product, all the wealth generated by the British economy.
Over the whole of 2005 the shortfall was £31.9 billion or 2.6 per cent of GDP, the highest percentage since 1999, up from £23.6 billion in 2004, or two per cent.
National Statistics pointed out that although the 2005 deficit was a record in cash terms those in the mid-1970s and late 1980s were far greater as percentage of GDP, reaching four per cent and 5.1 per cent respectively. The numbers were far worse, though, than City markets had expected. Coming only hours after US interest rates were raised above those in Britain for the first time in five year, they had the effect of driving the pound sharply lower against the dollar. Sterling dipped almost instantly by 1.5 cents to $1.734. But it rose fractionally against the euro.
Listing factors behind the worsening shortfall over the full year, NS said the the deficit on trade in goods increased by £5.2 billion to £65.6 billion as the UK became a net importer of oil for the first time since 1979.
Factors squeezing the surplus on trade in services included insurance claims after hurricane Katrina.
Bigger payments to the European Union in the first full years after its enlargement boosted net transfers abroad by £1.5 billion to £12.4 billion. That was partly offset by a £1 billion increase in the surplus from investment income to £27.4 billion.
Between the second and third quarters of 2005, the surplus from trade in services rose by £2.8 billion to £5.7 billion, but from investment income dropped by £2.8 billion to £3.7 billion, lowest for more than two years.
The current account deficit with the EU narrowed by £700 million in the fourth quarter to £8.1 billion. ..SUPL: