§ Mr. Denzil Daviesasked the Chancellor of the Exchequer whether he will estimate the contractionary effect on sterling M3 over the last six months caused by the balance of payments deficit.
§ Mr. LawsonThe external adjustments between DCE and £M3, which broadly reflect the private sector's external balance on both current and capital account, amounted to minus £1,115 million—seasonally adjusted—in the six months to mid-September. However, the overall impact of external transactions on £M3 is not simply equal to this statistical effect but will also depend on the impact of external developments on, for example, bank lending and the demand for gilts. These indirect effects cannot be measured with any precision, but it is likely that 527W they have served to reduce although not eliminate the contractionary effect on £M3.