That’s why we left! EU cost UK billions after Treasury forced to wait for vital pound move
THE European Union cost Britain billions of pounds after taking hours to grant the UK Government permission to withdraw from the European Exchange Rate Mechanism, Ken Clarke revealed.
Black Wednesday: Kenneth Clarke recalls waiting for ERM exit
The European Union had the UK wait “powerless’ for hours as the other member states came together to decide whether to let Britain quit the European Exchange Rate Mechanism (ERM) amidst growing reserve losses at the Bank of England. Ken Clarke told BBC Radio 4’s The Reunion the Government had planned to leave the ERM after failing to keep the pound over the EU lower currency exchange limit but could not act immediately as the rest of the bloc had to give permission. The former Chancellor said: “The whole day was one of the zaniest political gatherings I had ever been in and in an ever-mounting sense of panic took old, but not particularly on John Major.
“They then started suggesting, ‘we have to leave the ERM now,’ and it was Michael and Douglas and I who insisted on a last ditch effort, a temporary three percent rise to give us a few days to sort out what to do.
“I was called back to Admiralty House and then the Foreign Office lawyers persuaded Douglas to raise a completely idiotic point saying, formally, we could’t leave the ERM, we couldn’t just announce it.
“We had to send a Treasury official called Nigel Wicks off to a meeting that had to be called that evening in Brussels where we had to get the agreement of the other 27 countries.”
Mr Clarke continued: “So we sat there, powerless, for several hours while Nigel went off to this totally ritual meeting and we just hoped the Bank of England wasn’t losing too much money out of the reserves whilst this delay went by.
The EU had John Major and his Government wait hours before allowing the UK to leave the ERM
Ken Clarke described Black Wednesday as one of the “zaniest” days of his political life
“It was obvious we had no control over it and had been buffeted by events.”
September 16, 1992 later became known as Black Wednesday and 2005 estimates suggested the UK lost £3.3 billion on that single day.
Other EU members also suffered the consequences of flaws within the ERM but later returned to the system with either widened bands or adjusted central parities.
The negative performance on the day resulted in the British public, led by Lord Tebbit, to dub the ERM as the “Eternal Recession Mechanism.”
Norman Lamont, Chancellor of the Exchequer from 1990, had to resign because of Black Wednesday
Ken Clarke said the UK was “powerless” while waiting for the EU to make up its mind on the ERM
Black Wednesday sparked a wave of criticism against then-Chancellor of the Exchequer Norman Lamont, who ultimately was forced to resign the position.
Mr Clarke continued: “It actually destroyed the reputation of economic competence and knowing what we were doing which really is a great strength of the Conservative vote.
“Norman was constantly lambasted in Parliament and the media and chosen as the person to blame.
“He was kind of defenseless until John tried to move him out of the line of fire. Unfortunately, those two friends of mine never quite made it up afterwards.”
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