What is the significance of Margaret Thatcher's entry into the Exchange Rate Mechanism in 1990?

Economic significance: The decision to enter ERM in 1990 was economically detrimental as this occured at a time when the £ was valued too highly compared to the Deutschmark, meaning the exchange rate could not be locked into place to hold down inflation. The result was the 'Black Wednesday' monetary crisis of 1992 which cost the government around £3.5 billion and a significant depletion of foreign exchange reserves.

Political significance: The decision highlighted the lack of cohesion in Thatcher's cabinet as she was advised by Chancellor Lawson to enter the ERM in 1985 however refused to do so. The crisis of 1992 worked to galvanise further Eurosceptism in the Conservative party, impeding John Major's plans to integrate Britain further with the EU, and arguably was one of the main events that tipped the scales for the 'leave' side in 2016.

Answered by Hubert B. History tutor

1770 Views

See similar History A Level tutors

Related History A Level answers

All answers ▸

How much wider reading should I do?


How significant was parliamentary radicalism in the breakdown of relations between Crown and Parliament in the years 1625 to 1629?


To what extent were economic realities the most important factor in pushing both sides towards detente by 1972?


To what extent did the British Government adequately prepare for war by 1939?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2024

Terms & Conditions|Privacy Policy