§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what is his estimate of the level of real interest rates(a) on 7 December and (b) on 1 December in (i) August 1992 and (ii) 1978.
§ Mr. NelsonReal interest rates can be calculated in several ways, using either short or longer-term nominal interest rates, and either past or expected future rates of inflation.
Data on interest rates and inflation are available in the CSO publications "Financial Statistics" table 7.10 and "Economic Trends" table 3.1. Data on expected future inflation rates are published in the Treasury's monthly review of independent forecasters, and the Bank of England's inflation report.
As at close 1 and 7 December 1994 three-month and 10-year nominal interest rates were:
3 month 10 year 1 December 6.19 8.58 7 December 6.38 8.74
§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what is the effect of the 1/2 per cent. increase in lending rates on the cost of the PSBR for the rest of the current financial year; and what is his estimate of the PSBR for the next financial year.
§ Mr. NelsonThe effect of the ½ per cent. increase in lending rates on the cost of financing the public sector borrowing requirement for the current financial year will depend upon the level and structure of interest rates, the rate of inflation and the type of debt issued.
My latest estimate of the PSBR for 1995–96 is £21.5 billion.