§ 24. Mr. Higginsasked the Chancellor of the Exchequer if he will enumerate the components of the money supply and give figures for changes in the overall magnitude for convenient periods since 1964.
§ The Chief Secretary to the Treasury (Mr. John Diamond)The definition of the money supply used in official United Kingdom statistics covers the notes and coins held by U.K. residents other than banks, together with the net deposits by U.K. residents with the banking sector.
Figures of the components of the money supply and of changes in the overall magnitude from 1964 to the end of the second quarter of 1968 are given in Table 47 of the October issue of Financial Statistics.
§ Mr. HigginsDoes the right hon. Gentleman agree that the forecasting techniques based on Keynesian analysis which are now used by the Treasury are open to some doubt because they over-accentuate the demand side without taking into account the supply side? Will he say whether any check is made on the basis of forecasts relying on the changes in the money supply?
§ Mr. DiamondI fail to detect the relevance of the forecasting techniques that apply. I am not sure that the hon. Gentleman is dealing with the Question that I attempted to answer.
§ Mr. HordernIn view of the alarming increase in the level of money supply in the second quarter of this year, may I ask the Chief Secretary to say whether the Government have plans to restrain the money supply, either by requesting 1102 the banks to make higher deposits with the Bank of England or by increasing the size of their reserve ratios?
§ Mr. DiamondI owe it to the hon. Gentleman and to the House to explain that the situation that he has referred to was distorted by the figures of one end quarter. If he will be good enough to take that quarter together with the following quarter, he will find that the increase in the money supply is just under 6 per cent., which is slightly below the average for the past several years.