HC Deb 09 February 1988 vol 127 cc153-4W
Mr. Austin Mitchell

To ask the Chancellor of the Exchequer whether he will publish in theOfficial Report a table showing the increase in the real money supply and the change in the velocity of circulation of broad money order between 1974 and 1979 and from 1979 to date, together with (a) the average annual rate of growth in each case and (b) the annual rate of increase in real personal disposable increases in each period.

Mr. Lilley

[holding answer 4 February 1988]: There is no single measure of the real money supply. Recent figures for M0, M3, M4 and M5 are shown in the Bank of England's press release on the monetary aggregates dated 29 January 1988 and in "Financial Statistics". For earlier periods, figures for M0, M3, and M5 are shown in "Economic Trends, Annual Supplement", 1987 edition, and figures for M4 were made available by the Bank of England in June 1987. All of these series have been subject to changes in coverage as the financial system has evolved and in the case of M5 there was a change in definition in June 1986. For this reason, no meaningful growth rates can be calculated over the whole of the periods requested. Recent figures for the velocity of circulation of broad money are shown in "Financial Statistics", table 11.5. Earlier figures for velocity can be derived from figures shown in the "Economic Trends, Annual Supplement", but comparisons over time are affected by the difficulties noted above. Assuming that the hon. Member seeks figures on real personal disposable incomes, these are readily accessible in "Economic Trends".

what the equivalent maximum level of expenditure would be year by year as a proportion of Community GNP. The revenue figures for 1988 onwards used in the calculations are consistent with those in the Commission's report on the future financing of the Community (COM(87)101) and allow for some erosion in customs duties and levies in real terms over time.

Mr. Austin Mitchell

To ask the Chancellor of the Exchequer whether he will publish in the Official Report a table showing the increase in the amount of broad money between(a) February 1974 and June 1979 and (b) June 1979 to the end of 1987, together with the average annual rate of growth; and if he will account for the difference and explain the effect on prices in each period.

Mr. Lilley

[holding answer 4 February 1988]: There is no single measure of the broad money supply. Recent figures for M3, M4 and M5 are shown in the Bank of England's press release on the monetary aggregates dated 29 January 1988 and in "Financial Statistics". For earlier periods, figures for M3 and M5 are shown in "Economic Trends, Annual Supplement", 1987 edition, and figures for M4 were made available by the Bank of England in June 1987. All of these series are subject to changes in coverage as the financial system evolves and in the case of M5 to a change in definition in June 1986. For this reason, no meaningful growth rates can be calculated over the whole of the periods requested.

As was made clear, for example, in chapter 2 of the 1987–88 FSBR, there is no simple relationship between the growth of broad money and money GDP and inflation. The Government monitors the growth of broad money as one of the range of factors taken into account in assessing monetary conditions.