§ Mr. Skeetasked the Chancellor of the Exchequer what was the percentage increase in money supply for each year since 1968;and whether it is his policy to continue to expand the supply at substantial rates or to curtail it.
§ Mr. NottPercentage increases in the money supply (M3) since 1968 are shown in the following table:
Per cent. 1968 7.3 1969 3.1 1970 9.5 1971 13.1 My right hon. Friend's policy is to aim at a growth of money supply that is consistent with the general objectives of economic policy. As my right hon. Friend explained in his Budget Statement the high growth of output that we seek this year will entail a growth of money supply that is also high by the standards of past years.
§ Mr. Skeetasked the Chancellor of the Exchequer why the money supply has expanded by over 13 per cent. comparing 1971 with 1970;and how this is consistent with sound economic policies.
§ Mr. NottA faster rise in the money supply was to be expected as the economy emerged from a number of years of slow growth. In particular, companies' needed to rebuild their money balances after a period of substantial pressure on their268W liquidity. To have sought to hold the expansion of money supply below this rate would have imposed a brake on the growth of output at a time when the economy was seriously under-employed.