This is partly because oil exports are falling. Also, says Nick Bate at Bank of America Merrill Lynch, it is because UK exporters have responded to sterling's big fall since 2008 by raising prices rather than increasing sales volumes.
This matters because weak exports threaten to hold back the economic recovery. "Near-term prospects for manufacturers are poor," says Nida Ali of Ernst & Young's Item club. She says that exporters are shifting towards faster-growing markets, but this will be a "slow process". Last year, for example, the UK exports to China were worth only £10.5bn compared with £134.4bn to the eurozone.
But a big deficit on visible trade isn't the only reason for the UK's overseas deficit. Mr Bate points out that UK earnings on overseas direct investments also fell last year, contributing to the UK having a current account deficit of 3.7 per cent of GDP, its biggest since 1989. This deficit, he says, is "structural" and "could persist for some time".
The deficit means - by definition - that the UK is borrowing from overseas, that domestic capital spending exceeds savings. If this is the case when capital spending and domestic demand is weak, the deficit will probably get bigger if the economy recovers. This, says Mr Bate, poses a risk to sterling. Although the cyclical upturn could strengthen the pound - to the extent that the UK's economy is healthier than the eurozone's - concerns about the deficit are more likely, he says, to drag the pound down.
A further problem is that current account deficits can be warning signs of impending financial crises; Portugal, Spain, Ireland, Iceland and Greece all had huge deficits in mid-2000. But the UK's deficit is not yet so large as to be alarming on this count.
