Yorkshire Post - - FEATURES & COMMENT - Mark Stu­art

MOST 25TH an­niver­saries are marked by a cel­e­bra­tion of some sort. On such happy oc­ca­sions, cou­ples gather around them their clos­est friends, re­call­ing fond mem­o­ries.

For Euroscep­tics, to­day’s 25th an­niver­sary of Bri­tain’s fall-out from the Ex­change Rate Mech­a­nism (ERM) on Septem­ber 16, 1992, an event which be­came known as ‘Black Wed­nes­day,’ is in­deed a cause for cel­e­bra­tion. They see it as ‘White Wed­nes­day’, the day when Bri­tain freed it­self from the yoke of Euro­pean in­te­gra­tion.

But one per­son who will def­i­nitely not be cel­e­brat­ing to­day is Sir John Ma­jor, whose Con­ser­va­tive gov­ern­ment suf­fered a blow to its cred­i­bil­ity from which it never fully re­cov­ered.

So, 25 years later, what are the longterm im­pli­ca­tions of Black Wed­nes­day, both po­lit­i­cally and eco­nom­i­cally?

In Oc­to­ber 1990, as Chan­cel­lor of the Ex­che­quer, John Ma­jor had ca­joled Mar­garet Thatcher into join­ing the ERM as a means of com­bat­ting in­fla­tion. But Ma­jor’s mis­take when he be­came Prime Min­is­ter was to stake his en­tire po­lit­i­cal rep­u­ta­tion on stay­ing in the ERM.

Six days be­fore ‘Black Wed­nes­day’, Ma­jor de­clared that to come out of the ERM would be ‘the soft op­tion, the de­val­uer’s op­tion’.

The in­ter­na­tional money mar­kets quickly took a dif­fer­ent view and eight months, be­fore leav­ing the Gov­ern­ment claim­ing that Ma­jor was ‘in of­fice not in power’.

It had all been so dif­fer­ent for Ma­jor when he had signed the Maas­tricht Treaty in De­cem­ber 1991, declar­ing it ‘game, set and match’ for Bri­tain. Only a hand­ful of Con­ser­va­tive rebels had op­posed it on that oc­ca­sion. Black Wed­nes­day changed all that. It was the mo­ment at which a ma­jor­ity of the Con­ser­va­tive Party turned their backs on Europe, un­leash­ing a civil war on which still res­onates to this day.

At an ugly Con­ser­va­tive party con­fer­ence in the au­tumn of 1992, Nor­man Teb­bit dubbed the ERM ‘the eter­nal re­ces­sion mech­a­nism’. Re­ply­ing to an ill-tem­pered de­bate, the For­eign Sec­re­tary Dou­glas Hurd pleaded with his party to give the mad­ness of dis­unity a miss, as the Prime Min­is­ter passed him ‘give ‘em hell’ notes, writ­ing ‘don’t worry about caus­ing of­fence’.

There­after, a bill had to be passed to en­sure the Par­lia­men­tary rat­i­fi­ca­tion of the Maas­tricht Treaty. Em­bold­ened, Con­ser­va­tive MPs like Iain Dun­can Smith, egged on by Mar­garet Thatcher in the House of Lords, voted against the Gov­ern­ment night af­ter night. In the words of Tris­tan Garel-Jones, the Min­is­ter for Europe at the time, the Con­ser­va­tive Party ‘bled to death’ for 18 months.

Only by pre­sent­ing the rebels with a nu­clear op­tion of an early gen­eral elec­tion, which they would have lost, was Ma­jor fi­nally able to get the Treaty passed in July 1993.

Eco­nom­i­cally, Black Wed­nes­day was also a dis­as­ter for the Ma­jor gov­ern­ment. Up un­til that point, it was the Labour Party which had not been trusted on the econ­omy, hav­ing de­val­ued the pound in 1949 and again in 1967.

The ERM de­ba­cle was seen as a na­tional hu­mil­i­a­tion on a scale com­pa­ra­ble with the In­ter­na­tional Mon­e­tary Fund (IMF) cri­sis of Septem­ber 1976, when De­nis Healey had been forced to go ‘cap in hand’ to the bankers to bail out Bri­tain.

Hav­ing en­joyed a size­able lead over Labour on eco­nomic com­pe­tence at ev­ery gen­eral elec­tion be­tween 1964 and 1992, af­ter Black Wed­nes­day the Con­ser­va­tives were now seen as the eco­nom­i­cally in­com­pe­tent party.

In the years that fol­lowed, vot­ers suf­fered neg­a­tive eq­uity on their mort­gages. Even when the econ­omy re­cov­ered from 1993 on­wards thanks to the wise stew­ard­ship of Ken­neth Clarke, the vot­ers re­mem­bered their dire per­sonal eco­nomic ex­pe­ri­ences and re­fused to give the Con­ser­va­tives any credit. In­stead, they trans­ferred their grow­ing eco­nomic op­ti­mism onto the charis­matic Tony Blair and his re­vamped New Labour Party, which won a land­slide at the 1997 Gen­eral Elec­tion.

But the most im­por­tant im­pact of Black Wed­nes­day was to turn the Con­ser­va­tives from a largely pro-Euro­pean Party into a mainly scep­ti­cal one. From now on, a grow­ing band of Euroscep­tics saw the Euro­pean in­te­gra­tion project as flawed eco­nom­i­cally, and as the cause of the re­ces­sion in Bri­tain. As John Ma­jor put it in his mem­oirs, the ERM de­ba­cle turned ‘a quar­ter cen­tury of un­ease into a flat re­jec­tion of any wider in­volve­ment in Europe’.

In his first party con­fer­ence speech as leader in Oc­to­ber 2006, David Cameron, recog­nis­ing that his col­leagues had be­come ob­sessed with the is­sue, urged them to stop ‘bang­ing on’ about Europe.

But 10 years later his gam­ble to lance the boil of Europe failed as Bri­tain voted to leave the Euro­pean Union. Among his many mis­takes dur­ing the ref­er­en­dum cam­paign, Cameron mas­sively un­der-es­ti­mated the ide­o­log­i­cal re­solve of the Euro-scep­tics.

That ide­ol­ogy was forged on Black Wed­nes­day, or should that be ‘White Wed­nes­day’?

Mark Stu­art is a po­lit­i­cal aca­demic from York who has writ­ten the bi­ogra­phies of John Smith and Dou­glas Hurd.


Prime Min­is­ter John Ma­jor in 1996, de­liv­er­ing a de­fi­antly pro-Euro­pean speech as Euroscep­tics rose to promi­nence in the Con­ser­va­tive Party in the af­ter­math of the ERM de­ba­cle 25 years ago.

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