The monthly figures of the London clearing banks' deposits and advances are subject to large seasonal influences. The most important of these is the payment of tax to the Exchequer, a large part of which is concentrated in the first quarter of the calendar year and puts the Exchequer into surplus in this period. Two other examples are the harvest, which is preceded by greater need for finance by farmers and followed by repayment of this finance; and the heavy retail sales which take place before Christmas, with a consequent reduction in stocks and in retailers' need for finance
These seasonal movements in banking figures, which are quite separate from long-term trends or from sporadic influences, can differ from year to year, both in their size and in their exact timing. This is because the seasonal influences in the economy themselves vary for a number of reasons; for example, the scale of the seasonal movement caused by the Budget varies from year to year with the structure of the Budget as a whole. Nevertheless, the pattern in the banks' figures each year is sufficiently similar to justify the assumption that something like it could reasonably be expected to recur in the current year. If an approximate allowance is made for this pattern, the interpretation of changes in current banking figures becomes much easier.
Seasonal adjustment of banking statistics