mpc.theyserveforyou.com

mpc: 3 to £3.8 billion in 1999 Q3. `Borrowing for consumption' ­ a measure which combined estimates of mortgage equity withdrawal and unsecured lending ­ was at nearly 5% of disposable income in Q3, its highest level since late 1990. 10 The housing market remained buoyant, with prices rising some 13½% over the last year on both the Halifax and Nationwide measures, and with house price strength now more widely spread across the UK than before, although significant regional differences remained. Measures of turnover and housing activity showed a less clear trend, however, and a survey of house prices by the Royal Institute of Chartered Surveyors (RICS) for December recorded a rather lower figure for the balance of estate agents reporting a rise in house prices. 11 Two-year interest rates had risen by around 30 basis points since the December meeting. The rise in interest rates had not been offset by a rise in inflation expectations. Other things being equal, the rise in real interest rates along the yield curve would tend to dampen demand, including via its effect on new fixed-rate mortgages. So monetary conditions in the UK had clearly tightened over the past month. This might in part reflect the stronger prospects for world economic activity. 12 In addition, the effective exchange rate index had risen by around 1¼% over the month. This would exacerbate the impact on net trade of the earlier appreciation, although it would be offset at least in part by the pick-up in world demand. Meanwhile equity prices in the UK had been rather volatile, rising during December and then falling back, but on balance were little changed over the month, and remained well above the central projection in the November Inflation Report.

Demand and output

13 The latest National Accounts data included revisions for the period from 1998 Q1. While estimates of the level of GDP in 1999 Q3 were little changed, growth in 1998 Q4 had been revised down, with more of a recovery in the following two quarters. GDP at constant market prices was now estimated to have grown by 0.8% in 1999 Q3 (as against the previous figure of 0.9%) but the year-on-year figure had been revised up to 1.9% (from 1.8%). 14 Household consumption was still estimated to have risen by 0.6% in 1999 Q3, but the level of consumption was now 0.6% lower than previously estimated, in part reflecting a downward revision to expenditure on cars earlier in 1999 following the changes in the seasonal pattern for vehicle