Black Wednesday 30 Years On

1 The origins of the ERM The origins of Black Wednesday go back to the efforts of the European Community (EC) to promote closer economic and monetary integration in the late 1970s. [...] In the Financial Times Philip Stephens reported that Smith’s speech “appeared to nudge the party a step closer to an eventual commitment to take Sterling into the EMS”.8 However, the Labour leadership’s increasingly positive attitude to the ERM was not reflected in the conclusions of the policy review, ‘Meet the Challenge, Make the Change,’ released in May 1989. [...] It was left to Labour back bencher Giles Radice to say what Smith was privately thinking; “Is not the trouble with the Government's decision of 5 October the fact that it was taken at the wrong time, for the wrong reasons and at the wrong rate?”20 The obvious dilemma facing Labour’s leadership was that any overt criticism of the entry rate would expose them to the charge that it could lead to a ru. [...] Despite spending billions in reserves, the Pound continued to haemorrhage support.25 The clear winner in the trial of strength between the Bank of England and the speculators was George Soros, who made over $1 billion betting against the Pound. [...] For Keegan et al Black Wednesday should be seen as “the first Brexit”: the catalyst to the Conservative’s slow-burn confrontation with the EU that culminated in the narrow vote to leave after the 2016 referendum.28 Labour’s Black Wednesday Bonanza The aftermath of Black Wednesday was a bonanza for Labour, now able to steal reputational advantage on the economy from the Tories.