§ The increasing credibility of that framework has brought our long-term interest rates down to their lowest level for over 25 years. That fact also demonstrates the ease with which this year's borrowing requirement has been financed, but the very success of the funding programme, coupled with last year's substantial gilt sales to banks and building societies, has squeezed the liquidity of the banking system, complicating the task of managing the money markets.
§ To offset the purchases made by banks and building societies last year, I intend to sell some £7 billion worth fewer gilts than would otherwise be necessary to fund the public sector borrowing requirement through to the end of 1994-95. Using this flexibility in our established funding policy will ease money market pressures, while continuing to ensure that borrowing is financed in a non-inflationary way.