| Actual | Previous | |
| Month over Month | 0.4% | -0.3% |
| Year over Year | 4.4% | 4.5% |
Highlights
In August 2026, the UK’s broad money supply (M4) rose by 0.4 percent, from 0.3 percent fall in the previous month. Annually, M4 expanded by 4.4 percent, slightly down from the 4.5 percent rise in the previous month. While the annual figures suggest an expansion in money supply, M4 excluding intermediate other financial corporations (OFCs) reveals a similar trend, growing by 4.4 percent over the year, aligning with M4 growth, while it I creased slightly higher by 0.5 percent over the month compared to M4. This indicates that money held by households and non-financial businesses is increasing but at a slightly faster pace than M4 growth over the month but at the same pace over the year. This reflects ongoing support for consumption and investment, helping to underpin economic activity without generating inflationary pressure.
The lending landscape presents a more encouraging trend as M4 lending over the year rose by 6.5 percent in August, down from 7.2 percent the previous month. However, lending growth excluding OFCs, considered a more accurate gauge of real-economy dynamics, grew by 7.0 percent annually, up from 6.3 percent the previous month. This suggests that household and non-financial firm borrowing is expanding at a higher pace compared to the previous month, but consistent with stable economic fundamentals. In summary, August’s update points to a rise in monthly money supply growth and a positive annual money supply growth, alongside steady real-economy lending, suggesting a measured expansionary and supportive monetary environment consistent with stable and non-inflationary economic expansion.
Definition
M4 is the Bank of England's main broad measure of money supply. There is no target for M4 and in practice the central bank tends to follow an adjusted measure that excludes intermediate other financial corporations in order to get a handle on current underlying trends. The M4 private sector lending counterpart is the most closely watched aspect of the report.
Description
M4 is similar to the M3 measure used in some other countries. M4 includes everything in M2 (also called the retail component of M4) plus other deposits with an original maturity of up to five years; other claims on financial institutions such as repos and bank acceptances; debt instruments issued by financial institutions including commercial paper and bonds with a maturity of up to five years. Understanding the role of money in the economy has always been an important issue for policymakers. And the pickup in broad money growth and decline in credit spreads over the past three years together with more recent financial market turbulence has made it a particularly pertinent issue. Monetary data can potentially provide important corroborative or incremental information about the outlook for inflation. Quantitative easing is essentially a policy aimed at boosting money supply.