Mr Major’s Comments on the Exchange Rate Mechanism
Below is the text from John Major’s book “The Autobiography” regarding the Exchange Rate Mechanism (ERM), ISBN 0006530745, page 662.
“The slowdown in the economy turned into a recession in the third quarter of 1990 -
And so it did, and interest rates fell. It is not the case, as some have argued, that the British economy was only freed after Black Wednesday. During our membership of the ERM interest rates were continually falling -
Was our ERM membership a constraint on the speed at which we could cut interest rates? In the first year, I do not believe so: the Bank of England was still very anxious about the underlying inflationary pressure, and would certainly have resisted rapid cuts. To begin with, membership clearly made cuts easier, since it reinforced our anti-