Rupert Darwall

Is this a Black Wednesday moment for the Tories?

Kwasi Kwarteng's mini Budget has done untold damage to the party's credibility

(Credit: Getty images)

Kwasi Kwarteng delivered his mini-Budget one week after the thirtieth anniversary of Black Wednesday, when the markets forcibly ejected sterling from the Exchange Rate Mechanism (ERM). There’s one measure that makes recent market turmoil seem modest and even manageable by comparison with Black Wednesday. According to the Bank of England’s database, the pound fell 2.16 per cent against the euro on the day the Chancellor delivered his fiscal statement. By last Thursday, the pound was down only 1.91 per cent against the euro. Black Wednesday and its immediate aftermath saw sterling fall 13.9 per cent against the Deutschmark. In all other respects, however, the economic and political situation is more dire now than thirty years ago.

Britain joined the ERM as part of its counter-inflation strategy. In October 1990, the month Britain joined, inflation stood at 10.9 per cent and 9.5 per cent when mortgage interest payments are excluded on the RPI(X) measure.

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