Sectoral Flow of Funds

Abstract

Because of inadequacies in UK data the ‘supply and demand for credit technique’ cannot be used in the UK. The problem can partially be overcome if data are aggregated for the sectors of the economy; that is, for the public, corporate, personal and overseas sectors. It is sometimes possible to forecast an imbalance between the supply of savings and the demand for finance in the economy as a whole from predictions of the financial surpluses and deficits of the sectors. The patterns associated with the business cycle must, however, be borne in mind. The chapter concludes with a discussion of the "buffers’ that allow the supply and demand for finance to balance.