why is this essay a 15/25? also I type so thats why there are no diagrams

Macroeconomic performance could be measured by short term economic growth, which is dependent on AD and its components such as (X-M), and long term economic growth, which depends on productivity for example. A current account deficit is caused by M > X and could affect exchange rates, price competitiveness of goods and services and short term economic growth.
On one hand, the macroeconomic performance of the UK would typically be affected by the persistent nature of our current account deficit. In Extract C it states that countries such as “Germany” have had their “balance of payments surged to a record level”, allowing them to achieve “Health growth”. The fact that Germany was previously in a surplus which should have appreciated the euro, yet still maintain “healthy growth”, contrasted with the weak macroeconomic performance of the UK. Despite the UK being in a “persistent current account deficit”, the depreciation of the pound wasn’t enough to stimulate “Healthy growth” in the short run. Therefore, if the effects of having a current account deficit do not stimulate growth, then perhaps the current account deficit it's what’s causing weak macroeconomic performance. This would imply that if the UK were to start on a surplus like Germany, they would be more likely to achieve “Healthy growth” in the long run, despite the pound appreciating.
However, overall, this argument could be considered weak as the reason why Germany its growing but the UK isn’t might not be because of the starting position of current account, but rather due to structural factors in the UK’s economy such as low “labour productivity”, preventing us from gaining price competitive exports compared to Germany. who can supply “low oil prices”. This effectively hinders us from enjoying the benefits of having the pound depreciate as a result of the current account deficit, resulting in a lack of macroeconomic performance overall.
On the other hand, the extent of the impact of the persistent current account deficit on the UK’s macroeconomic performance could be considered weak as other factors, such as “overs. This is due to Extract B stating that despite the pound’s value falling by “16%”, it has “failed to lift exports significantly”. In theory, the UK having a large persistent current account deficit induces downwards pressure on the exchange rate, resulting in the demand for the pound shifting from D1 to D2 and the supply of the pound increasing on the FOREX market, as Q1 increases to Q2 (see D1). Typically, the deficit would lead to an increase in exports and a fall in imports, increasing short term economic growth, however, the depreciation of our currency is only effective if “overseas demand” for our exports is strong. Arguably, the price competitiveness of our exports should’ve increased, making them cheaper to overseas consumers,, increasing demand and prompting them to purchase the exports Despite the UK’s exports being price competitive.
However, if our trading partners are in a recession/ bust period as seen with D2 at point C and D, foreign consumer’s real incomes would’ve fallen, resulting in a lack of consumption. This would negate the effects of the depreciation of the pound, caused by the current account deficit, highlighting how the current account deficit does neither hinder or help the UK’s macroeconomic performance, as other factors such as overseas demand, are more pertinent.
Moreover, the persistent current account deficit the UK has hasn't increased consumption of goods and services. In theory, a persistent current account deficit would result in a perpetual depreciation of the pound, as seen in Fig1 Extract A, with the index value of the pound continuously falling from 93.13 to 74.1. This should result in imports becoming more expensive to domestic consumers, thus resulting in X> M assuming ceteris paribus, reusting in a current account surplus and increasing short term economic growth as AD shifts outwards.
However, Extract B argues that the “UK economy grew much faster” and that “imports” and “consumer spending” has increased. Despite the current account deficit weakening the value of the pound, other factors, such as economic growth can counteract the effects of the downward pressure on the exchange rate. With increased levels of economic growth, real incomes increased as AD shifts outwards in D1, resulting in the purchasing power of the pound increasing. Therefore, while depreciation does make exports more price competitive, imports, despite being more expensive due to the deficit, will still be consumed due to rising real incomes in the UK’s economy. This negates any surplus that could be generated on (X-M) as a result of the currency depreciating, perhaps even worsening the position of the deficit in the long run, negating any sort of growth that could’ve come out of a weaker exchange rate due to the current account deficit. Overall, the current account deficit doesn’t impact the macroeconomic performance of the UK as there are other, more pertinent factors, such as economic growth, which would negate any surplus the deficit would have generated.
On balance, I believe that the UK’s persistent current account deficit does not impact the macroeconomic performance of the UK. The UK has a high marginal propensity to import goods and services, yet it is able to finance this by running a surplus on the financial account, negating any effect the current account deficit could have on economic growth. What’s more, a persistent deficit would result in a persistent depreciation of the pound, effectively increasing X relative to M, resulting in macroeconomic growth. The reason why the UK is unable to achieve macroeconomic growth is due to structural weaknesses such as low labour productivity rather than the current deficit.