Britain is headed for its highest peacetime current account deficit and both household and government spending will have to slow painfully to correct it, according to economist Roger Bootle.

Writing in the latest Deloitte Economic Review, Mr Bootle says the significant widening of the UK’s current account deficit by £57bn ($113bn), or 4 per cent of gross domestic product, over the last decade is mostly due to expansion in household spending, although government expenditure has added to it. While there was a small correction in the fourth quarter of 2007, that was mostly due to write-offs by foreign investors in the UK’s financial sector. The corporate sector has run a small surplus.