Extent of borrowing to avoid the 1992 crash was hidden

Black Wednesday

BRITAIN spent $30billion (£23billion) to prop up the pound around Black Wednesday but the Treasury hid billions of dollars of borrowing to avoid panic. By hiking interest rates and borrowing dollars to exchange for pounds, the Government propped up sterling in an effort to keep Britain in the exchange rate mechanism (ERM), papers reveal.

The effort failed and Britain fell out of the ERM on Sept 16 1992.

Sterling plunged 14 per cent in a matter of days. By November it was down 23per cent. To stop the pound collapsing further the Government kept the extent of its borrowings secret.

“We have made public the fact of this borrowing but not its size,” wrote Jeremy Heywood in a letter to the prime minister’s office in November 1992.