§ 53. Dr. Reginald Bennettasked the Chancellor of the Exchequer what was the aggregate money supply, taking M3 together with building society deposits less amounts re-deposited by building societies with United Kingdom banks, in each of the last four years and in the first nine months of 1975.
§ Mr. DellThe figures are as follows:
Amount Outstanding at end of period £ million 1971 32,506 1972 40,349 1973 49,555 1974 55,616 End 2nd or 1975 58,412 source: financial statistics September 1975
590WFigures are not yet available for the third quarter 1975. The figures include M3—not seasonally adjusted—and the shares and deposits of building societies, but exclude the societies, cash and balances with banks. There are discontinuities in the M3 series, and therefore in the above definition, where new bank contributors are included for the first time at end-March 1972 and end-March 1973.
§ 6. Dr. Reginald Bennettasked the Chancellor of the Exchequer whether, in view of the recent greater relative attraction to investors in the private sector of Treasury bills, other Government securities, local authority debt and building society deposits compared with bank deposits in a period in which the United Kingdom banks have not been competing actively for funds, the recent trend in the growth in the money supply under the M3 definition is significantly understating the degree of liquidity in the hand of the private sector; and whether the money supply under the M3 definition will expand at a rate likely to exacerbate the inflationary trends in the economy as soon as the demand for bank loans increases.
§ Mr. DellM3 is not designed to measure the degree of overall liquidity in the economy; it covers only private sector deposits within the banking system and notes and coin in circulation. As the hon. Member will appreciate, a proper assessment of overall monetary conditions has to take account of a range of indicators including M3 and various measures of liquidity which include such assets as mentioned by the hon. Member. As regards the future rate of expansion of M3, my right hon. Friend has recently stated that as the economy moves out of recession the demand for credit will revive. It could then well reach a level at which some further restraint will be necessary if the money supply is to be kept under control.