European Union Current Account

The current account is an important part of a country's balance of payments. The balance of payments systematically records all economic transactions between residents and non-residents over a defined period, usually one year. On the one hand, the current account shows whether the volume of payment flows has increased and whether there is a surplus or deficit in the balance of payments. These are important indicators of an economy and also of the EU.

The current account balance combines four other balances: the trade balance (imports and exports of goods), the services balance (travel, transport and insurance transactions), the transfer balance (remittances from employees, international organizations to or from other countries, development aid) and the income balance (wages, salaries, interest and dividends).

This means that this balance sheet compared to the balance of payments, the most comprehensive one of the balance sheets, does not include cash flows from capital imports and capital exports and fluctuations in gold and foreign exchange reserves. In this way, the European Union's current account provides meaningful information on its external economic relations.

A current account surplus increases net external assets and leads to an increase in capital exports in the form of an increase in external assets in the capital account. Some economists interpret this as a sign of weakness, others as its strength. In the case of a current account deficit, of course, this is exactly the opposite. Furthermore, long-lasting, rising external imbalances are seen as causes of financial crises.

These figures are seasonally and calendar day adjusted by adjusting both revenue and expenditure, which show a clear seasonal pattern, through an indirect approach (also by country).

In general, however, values that exceed expectations are regarded as positive and for the EUR and negative if they are below expectations.