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Money Supply And Domestic Credit Expansion

Volume 979: debated on Wednesday 20 February 1980

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asked the Chancellor of the Exchequer whether he will publish in the Official Report a table comparing the increase in sterling M3 with the increase in domestic credit expansion for the five banking months before and the five banking months after mid-June 1979, together with an explanation for the difference in the rate of growth before and after mid-June.

The information is as follows:

Five banking months to mid June £ millionFive banking months after mid June £ million
£M32,115 (4·2%)2,772 (5·2%)
Monetary growth was rather more rapid in the five months after mid-June than in the five months before. The principal factors boosting monetary growth were the high level of bank lending (persisting from earlier in the year) and the higher than expected PSBR; net public sector debt sales were relatively modest during the autumn. The PSBR was always expected to be higher in the first half of the financial year than in the second, but it was increased by strikes and other industrial action which delayed the collection of VAT and telephone bills. It was to bring the rate of monetary growth back to the target range that the monetary measures of 15 November were announced.