§ Mr. Gouldasked the Chancellor of the Exchequer what was the velocity of circulation of sterling M3 in 1982; how this compares with the corresponding figures for the year ended 1974 and the year ended June 1980, and the most recent three quarters for which figures are available; and what is his assessment of the reasons for the changes.
§ Mr. MooreStatistics on the velocity of circulation of sterling M3 are given in Financial Statistics, table 11.1; velocity in 1974, on the same basis as this table, averaged 2.61. There was a major statistical break in the series for sterling M3 (and hence in velocity) at the end of 1981; a series adjusted for the break is not published.
Successive versions of the MTFS have explained that velocity may be influenced by a range of factors, including the exchange rate, the level and structure of interest rates, changes in savings behaviour, and institutional changes.