asked the Chancellor of the Exchequer if he is satisfied with the development of the money supply in the first quarter of 1980.
asked the Chancellor of the Exchequer if he is satisfied with the progress of the achievement of his monetary targets.
Recent figures suggest that the underlying rate of growth of sterling M3 is now well within the 7 to 11 per cent. target range.
Now that these figures appear to be much more optimistic, when will they have an effect on the rate of inflation?
As my right hon. Friend the Prime Minister has pointed out on a number of occasions, there is a well-established link between falls in the rate of growth of the money supply and falls in the rate of inflation. That is not mechanistic. There are variable time lags, but on the whole these lags tend to be about two years.
Obviously these figures are highly encouraging. Does my hon. Friend agree that the early implications suggest that the Government's strategy has laid the foundations from which we can look forward to perhaps the most urgent requirement of industry and the most useful thing that we can do for it, namely, a gradual reduction in the cost of borrowing money?
I entirely agree.
Is the hon. Gentleman aware that the Chancellor of the Exchequer told the Select Committee the other day that 2 per cent. must be added to the published figures of money supply to account for the distortions of the corset since the Government took office? Is he aware that in that case the Government have not met their monetary targets at any time in the last 12 months? That being so, why should anyone take the slighest notice of the fantasies in the medium-term plan?
As I have pointed out, there has been a sharp deceleration in the rate of growth of the money supply since my right hon. and learned Friend's measures last autumn. In the past five months, even taking into account the acceptance leak to which the right hon. Gentleman refers, the rate of growth of the money supply has been running at 9¾ per cent. a year.
Is the Minister aware that the Government's economic policy will mean many more days of action among workers who must defend their living standards against Government policies?
I can think of nothing more futile, and nothing more contrary to the interests of the working people of this country, than so-called days of action to which the hon. Member refers.