We generally think of breaking records as a good thing: running faster, swimming farther, lifting more. But recent broken records for Britain’s economy are nothing to celebrate.

Last year Britain recorded its worst ever trade deficit, in absolute terms, on record—and that is saying a lot considering that records go back to 1697. At the same time, the deficit expanded by 22 percent, to a whopping £84.3 billion. As a share of gross domestic product (total value of all goods and services produced in one year), the trade deficit is now at its highest level in 60 years, measuring at a record 6.5 percent of gdp. The visible trade (flow of tangible goods) deficit has also worsened for nine years in a row—another new record.

As the trade deficit has ballooned, at least some of those pounds sent overseas to pay for foreign-made goods have started to find their way home—resulting in another broken record: foreign takeovers of British companies.

The value of foreign purchases of UK firms climbed almost a third to a record £61.6 billion in 2006. Foreigners spent £37.5 billion more purchasing UK corporations than UK businesses spent purchasing their foreign competitors—also a new record high. The sellout of Scottish Power and baa are just two examples of a slew of British corporations that have recently succumbed to foreign takeovers.

But are ballooning trade deficits and foreign takeovers a cause for concern?

Although current politicians and finance ministers are reluctant to admit it, a large and growing trade deficit will have eventual economic ramifications. The simple fact is that each year Britain runs a trade deficit, it loses money through trade. A trade deficit of £84.3 billion means that foreign companies made £84.3 billion more selling goods to Britons than Britons made selling goods overseas. Historically, such high trade deficits are usually found in Second and Third World economies—not in the industrialized First World.

Often, such a massive trade deficit results in a weaker currency and higher import prices for British consumers. In this case, however, the pound has been the lucky beneficiary of a U.S. dollar sell-off in which other European Union nations have diversified into British pounds. But don’t expect pound strength to be indefinite; as long as the trade deficit continues, the pound will come under pressure—as will the savings accounts of British consumers.

And as more and more British companies are taken over by foreign interests, the greater the potential for profits and dividends earned on operations to be repatriated overseas as opposed to being reinvested in Britain.

Both the record-high trade deficit and the record foreign takeovers of British companies are symptoms of a rapid economic transformation occurring in Britain. As The Business put it, “[They] both reflect the profound change in the UK economy from manufacturing to services …. The UK has had a deficit in goods trade for most of the past 30 years. Its size and persistence is testimony to the epochal shift of manufacturing plants from the industrialized West to the low-cost economies of the East and South” (February 14).

An economy increasingly owned and controlled by foreign interests that is simultaneously hemorrhaging billions of pounds per year in trade is a big cause for concern. How much longer can Britain’s economy bleed?