HC Deb 24 October 1978 vol 955 cc898-9W
Mr. Lawson

asked the Chancellor of the Exchequer what is the annual rate of growth of M1, M3, and £M3, seasonally adjusted, over each of the three-month periods ending in mid-March, mid-June, and mid-September 1978.

Mr. Denzil Davies

The information is as follows:

PERCENTAGE GROWTH (SEASONALLY ADJUSTED) AT AN ANNUAL RATE OVER 3 MONTHS TO:
mid-March 1978
M1 24.4
M3 24.1
£M3 23.7
mid-June 1978
M1 8.7
M3 23.0
£M3 15.7
mid-September 1978
MI 16.7
M3 0.5
£M3 5.2

Mr. Lawson

asked the Chancellor of the Exchequer, pursuant to his reply to the hon. Member for Blaby, Official Report, 26th May, column 764, if he will now provide the comparable monetary supply and gross domestic product figures for the six months ending 31st March 1978.

Mr. Denzil Davies

Since my reply to the hon. Member on 26th May, a number of the figures concerned have beer revised. The following table therefore covers all the relevant periods since

ANNUALISED SIX MONTH GROWTH RATE (SEASONALLY ADJUSTED)
Percentage
Six months ending M1 Sterling M3 Gross domestic product at current market prices Real M1 Real Sterling M3
31st March 1974 … +4.0 +21.3 +7.7 -3.5 +8.1
30th September 1974 … +11.8 +6.3 +29.4 -11.6 -15.9
31st March 1975 … +21.1 +10.2 +24.1 -6.3 -14.7
30th September 1975 … +16.1 +11.1 +23.7 -6.3 -10.4
31st March 1976 … +14.5 +3.6 +18.2 +2.8 -7.0
30th September 1976 … +14.5 +15.2 +16.6 -7.4 -6.8
31st March 1977 … +5.6 +1.1 +11.5 -6.3 -10.3
30th September 1977 … +22.6 +11.2 +19.0 +7.9 -2.0
31st March 1978 … +23.8 +18.2 +11.9 +14.0 +8.9

Mr. Lawson

asked the Chancellor of the Exchequer what analysis he has made of the connection between the rate of growth of the money supply and the exchange rate.

Mr. Denzil Davies

There is no simple mechanical relationship, especially in the short run, between the money supply and the exchange rate. Movements in the exchange rate reflect a wide variety of factors; but monetary factors are likely to be important in influencing capital flows, and hence the exchange rate. The possible impact of rapid money supply growth on the exchange rate and hence on the of inflation is one of the considerations underlying the Government's determination to maintain firm control over the growth of the money supply.