Because the neutral wire is a current-carrying conductor, it must always be treated as potentially live, even though it is at or near ground potential. The neutral wire is a fundamental, yet often misunderstood, component of household electrical systems. Under normal operating conditions, the. The cables incoming top right are UK old-style (red=live, black=neutral), the cables leaving top and bottom left are EU new-style (brown=live, blue=neutral). The whole place was largely rewired a decade or so ago, which explains the mismatch. It completes the circuit by directing the current to a ground or busbar, normally located at the electrical panel.