§ Mr. Grylls
asked the Chancellor of the Exchequer whether he is content with the treatment of changes in the public sector's holdings of bank deposits in the current definitions of the public sector borrowing requirement and sterling M3.
§ Mr. Lawson
On current definitions, changes in deposits held by the public sector with United Kingdom banks affect the size of the PSBR; and these deposits are included in sterling M3 and M3—but not in the other monetary aggregates. Although the level of public sector depositis is relatively small, changes in individual months can be large. These changes, however, are erratic, and tend to be reversed over a fairly short period. They are of no economic significance. In future, therefore, public sector deposits will be excluded from sterling M3 and M3—with effect from the beginning of the next target period—and from the PSBR—with effect from the 1984–85 financial year. These changes in definition are likely to have only minor effects on annual totals.
Further details of the proposed re-definitions, and figures for earlier periods, will be given in Economic Trends and the Bank of England Quarterly Bulletin.