HC Deb 13 November 1991 vol 198 cc526-30W
Mr. Marlow

To ask the Chancellor of the Exchequer if he will list the underlying rate of inflation and minimum lending rate for each of the last 150 months, setting out in each case the difference showing whether it is positive or negative, also marking each month when the economy was in recession with the letter R.

Mr. Maples

[holding answer 12 November 1991]: There is no single measure of underlying inflation. For the purposes of this answer, it is defined as the RPI less mortgage interest payments. Since 1981 a minimum lending rate has been in operation for only two days. Instead three-month inter-bank rates have been used. There is no agreed definition of recession. For the purposes of this answer, it is defined as occurring when GDP falls for two or more consecutive quarters. GDP figures are available only quarterly, so it is not possible to identify when the economy is in recession month by month. Rs have been placed beside those months which make up recessionary quarters. The information is in the following table:

Average 3 month interbank rate (i) RPI excluding mips (ii) Difference (iii)
1979
April 11.69 9.1 2.59
May 11.82 9.3 2.52

Average 3 month interbank rate (i) RPI excluding mips (ii) Difference (iii)
June 13.12 10.2 2.92
July 13.98 14.7 -0.72
August 14.12 15.0 -0.88
September 14.17 15.9 -1.73
October 14.12 16.6 -2.48
November 16.24 16.7 -0.46
December 16.81 16.9 -0.09
1980
January 17.16 17.4 R -0.24
February 17.77 17.9 R -0.13
March 18.11 18.6 R -0.49
April 17.64 20.6 R -2.96
May 17.05 20.8 R -3.75
June 16.77 20.0 R -3.23
July 15.88 15.8 R 0.08
August 16.53 15.2 R 1.33
September 16.00 14.7 R 1.30
October 15.98 14.3 R 1.68
November 15.84 14.2 R 1.64
December 14.73 13.9 R 0.83
1981
January 14.28 13.0 R 1.28
February 13.04 12.6 R 0.44
March 12.65 12.8 R -0.15
April 12.33 12.4 -0.07
May 12.40 12.2 0.20
June 12.66 11.8 0.86
July 13.79 11.4 2.39
August 14.18 12.0 2.18
September 14.78 11.9 2.88
October 16.33 12.2 4.13
November 15.06 12.1 2.96
December 15.44 12.0 3.44
1982
January 15.13 12.0 3.13
February 14.48 10.6 3.88
March 13.57 9.8 3.77
April 13.77 9.1 4.67
May 13.35 9.2 4.15
June 13.00 8.8 4.20
July 12.37 8.3 4.07
August 11.11 7.6 3.51
September 10.89 7.3 3.59
October 9.79 7.0 2.79
November 9.39 6.7 2.69
December 10.62 6.6 4.02
1983
January 11.21 6.0 5.21
February 11.34 6.7 4.64
March 10.98 6.0 4.98
April 10.26 4.9 5.36
May 10.26 4.5 5.76
June 9.94 4.5 5.44
July 9.89 4.7 5.19
August 9.87 5.1 4.77
September 9.69 5.2 4.49
October 9.38 5.0 4.38
November 9.30 4.9 4.40
December 9.42 4.8 4.62
1984
January 9.45 4.5 4.95
February 9.38 4.5 4.88
March 8.95 4.6 4.35
April 8.88 4.9 3.98
May 9.40 4.9 4.50
June 9.45 4.9 4.55
July 11.51 4.5 7.01
August 11.07 4.3 6.77
September 10.83 3.9 6.93
October 10.67 4.2 6.47

Average 3 month inter-bank rate (i) RPI excluding mips (ii) Difference (iii)
November 9.93 4.1 5.83
December 9.82 4.1 5.72
1985
January 11.68 4.6 7.08
February 13.76 4.6 9.16
March 13.63 5.2 8.43
April 12.76 5.3 7.46
May 12.66 5.3 7.36
June 12.44 5.3 7.14
July 12.04 5.2 6.84
August 11.50 5.3 6.20
September 11.55 5.6 5.95
October 11.55 5.2 6.35
November 11.57 5.2 6.37
December 11.76 5.1 6.66
1986
January 12.83 4.9 7.93
February 12.65 4.8 7.85
March 11.72 4.0 7.72
April 10.48 3.4 7.08
May 10.22 3.1 7.12
June 9.78 3.3 6.48
July 9.96 3.2 6.76
August 9.84 3.3 6.54
September 10.12 3.4 6.72
October 11.04 3.4 7.64
November 11.17 3.3 7.87
December 11.36 3.5 7.86
1987
January 11.05 3.6 7.45
February 10.86 3.7 7.16
March 9.97 3.8 6.17
April 9.80 3.6 6.20
May 8.82 3.8 5.02
June 8.90 3.5 5.40
July 9.21 3.7 5.51
August 10.04 3.7 6.34
September 10.16 3.5 6.66
October 9.98 3.9 6.08
November 8.95 4.0 4.95
December 8.77 4.0 4.77
1988
January 8.97 3.7 5.27
February 9.27 3.6 5.67
March 8.89 3.8 5.09
April 8.30 4.2 4.10
May 8.03 4.4 3.63
June 8.93 4.7 4.23
July 10.55 5.0 5.55
August 11.39 5.0 6.39
September 12.15 5.2 6.95
October 12.04 5.1 6.94
November 12.31 5.1 7.21
December 13.13 5.1 8.03
1989
January 13.14 5.5 7.64
February 13.02 5.7 7.32
March 13.05 5.7 7.35
April 13.13 5.9 7.23
May 13.14 6.0 7.14
June 14.15 5.9 8.25
July 13.92 5.8 8.12
August 13.85 5.7 8.15
September 14.02 5.8 8.22
October 15.02 6.1 8.92
November 15.11 6.1 9.01
December 15.12 6.1 9.02
1990
January 15.16 6.1 9.06

Average 3 month inter-bank rate (i) RPI excluding mips (ii) Difference (iii)
February 15.11 6.2 8.91
March 15.29 6.3 8.99
April 15.21 7.9 7.31
May 15.15 8.1 7.05
June 14.97 8.2 R 6.77
July 14.95 8.3 R 6.65
August 15.00 9.1 R 5.90
September 14.91 9.5 R 5.41
October 14.03 9.5 R 4.53
November 13.64 9.2 R 4.44
December 13.80 9.0 R 4.80
1991
January 13.97 8.5 R 5.47
February 13.25 8.6 R 4.65
March 12.40 8.4 R 4.00
April 11.95 6.8 R 5.15
May 11.53 6.6 R 4.93
June 11.24 6.9 R 4.34
July 11.09 6.8 * 4.29
August 10.89 6.2 * 4.69
September 10.29 5.7 * 4.59
(a) Column (iii) only shows difference between columns (i) and (ii), not the "real" interest rate as usually calculated. For this see OR 12 June 1991, cols. 549–554w.
(b) *GDP figures only available until 1991 Q2.

Mr. Marlow

To ask the Chancellor of the Exchequer if he will give the real interest rates in the United Kingdom and Germany for each of the last 60 months using as real rates the difference between MLR and the underlying rate of inflation.

Mr. Maples

[holding answer 12 November 1991]: Official interest rates, such as the MLR or the German discount rate, are not comparable across countries. International comparisons therefore generally use market interest rates; three-month inter-bank rates have been used in the table.

There is no generally agreed definition of "underlying inflation". For Germany the table uses consumer price inflation excluding rent. For the United Kingdom the retail prices index excluding mortgage interest payments has been used.

There is no single measure of real interest rates. They are most often calculated by deflating the interest rate by an appropriate measure of inflation, rather than from a simple difference between two rates. The table uses the method suggested in my hon. Friend's question.

United Kingdom 3 month interest rates less RPI excluding mips German 3 month interest rates less CPI excluding rent
1986
January 7.9 3.5
February 7.9 3.9
March 7.7 4.6
April 7.1 4.9
May 7.1 5.0
June 6.4 5.0
July 6.7 5.3
August 6.4 5.3
September 6.8 4.2
October 7.7 5.7
November 7.9 6.2
December 7.9 6.4
1987
January 7.5 5.8

United Kingdom 3 month interest rates less RPI excluding mips German 3 month interest rates less CPI excluding rent
February 7.2 5.0
March 6.2 4.6
April 6.2 4.2
May 5.0 4.0
June 5.4 3.9
July 5.5 3.6
August 6.3 3.4
September 6.7 3.8
October 6.1 4.1
November 5.0 3.0
December 4.9 1.9
1988
January 5.3 2.7
February 5.7 2.5
March 5.1 2.5
April 4.1 2.4
May 3.6 2.5
June 4.2 2.8
July 5.6 3.9
August 6.4 4.4
September 7.0 3.7
October 6.9 3.8
November 7.2 3.5
December 8.0 3.8
1989
January 7.6 3.5
February 7.3 4.1
March 7.4 4.2
April 7.2 3.6
May 7.1 4.2
June 8.3 4.2
July 8.1 4.4
August 8.2 4.3
September 8.2 4.5
October 8.9 5.0
November 9.0 5.3
December 9.0 5.0
1990
January 9.1 5.6
February 8.9 5.7
March 9.0 5.9
April 7.3 6.1
May 7.1 6.2
June 6.8 6.2
July 6.6 6.0
August 5.9 5.7
September 5.4 5.6
October 4.5 5.3
November 4.4 6.0
December 4.8 6.6
1991
January 3.5 6.6
February 4.7 6.5
March 4.0 6.8
April 5.2 6.6
May 4.9 6.3
June 4.3 5.8
July 4.3 4.7
August 4.7 5.2
September 4.6 5.3

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