Bank of England figures point to subdued UK money supply

City A.M. Reporter
THE UK’s money supply continued to shrink in June, the Bank of England revealed yesterday, although the Bank’s favoured measure – which excludes intermediate other financial corporations – painted a more solid picture.

The preferred measure, known as M4ex, was up 3.5 per cent on the year in June after a three per cent rise in May, edging up half a per cent on the month.

While not as severe as the steep declines seen in the other measurements, the number is “still far from strong”, according to Blerina Uruci, an economist at Barclays.

And Jens Larsen, chief European economist at RBC Capital Markets, said the data was “no better than the previous month”.

The three month on three month figures showed a lower rate compared to May.

The headline M4 number, which the Bank says is a less economically relevant number, collapsed 5.2 per cent in June compared to the same time the previous year, the steepest drop in the data’s history.

“Given our view that the euro-zone crisis is likely to intensify, we continue to expect weak money and credit growth to undermine the pace of the economic recovery for some time to come,” Capital Economics added in a note.