{"id":2646,"date":"2008-10-29T12:00:07","date_gmt":"2008-10-29T12:00:07","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2646"},"modified":"2025-03-27T15:48:42","modified_gmt":"2025-03-27T15:48:42","slug":"uk-monetary-data-confirm-post-lehman-train-wreck","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2646","title":{"rendered":"UK monetary data confirm post-Lehman train wreck"},"content":{"rendered":"<p>The dramatic negative shift in the economic outlook resulting from the post-Lehman freezing of money and credit markets is confirmed by detailed monetary statistics for September released today.<\/p>\n<p>Forget the headline annual increases of 12.4% and 14.2% in broad money M4 and bank lending (excluding securitisations) &#8211; these have been hopelessly distorted by a rerouting of interbank business through non-bank financial intermediaries. For a truer read, look at M4 and lending excluding &#8220;other financial corporations&#8221; (OFCs). Annual increases in these measures dropped to 5.0% and 6.8% respectively in September &#8211; the lowest since 1999\/2000.<\/p>\n<p>It gets worse. In the last three months, M4 and lending ex OFCs grew at annualised rates of just 2.8% and 2.3% &#8211; see charts.<\/p>\n<p>The non-OFC private sector comprises households and non-financial corporations. Companies are under severe financial pressure. Their M4 holdings dropped again in September and are down 3.8% over the last year &#8211; the largest annual fall since 1980. Meanwhile, their access to credit has been curtailed at a time when working capital needs are likely to have been boosted by the economic downturn. Outstanding bank credit contracted in the three months to September.<\/p>\n<p>Narrow money developments are equally concerning. M1, comprising currency in circulation and instant-access deposits, rose by just 0.1% in the year to September &#8211; the lowest annual increase since 1969. Real M1 contracted by 4.7%, the largest fall since 1980.<\/p>\n<p>With the September figures unlikely to capture the full impact of the freeze, monetary trends clearly warrant a large cut in Bank rate next week. My MPC-ometer continues to project a reduction of 75-100 basis points, with a full-point move likely if three-month LIBOR is above 5.75% at the time of the meeting.<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/UK-M4-ex-financial-corps.jpg?__SQUARESPACE_CACHEVERSION=1225282743124\" alt=\"\" \/><\/span><\/span><\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/UK-M4-lending-ex-financial-corps.jpg?__SQUARESPACE_CACHEVERSION=1225282762217\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The dramatic negative shift in the economic outlook resulting from the post-Lehman freezing of money and credit markets is confirmed by detailed monetary statistics for September released today. Forget the headline annual increases of 12.4% and 14.2% in broad money M4 and bank lending (excluding securitisations) &#8211; these have been hopelessly distorted by a rerouting [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2646","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2646"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2646\/revisions"}],"predecessor-version":[{"id":4955,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2646\/revisions\/4955"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}