The six men behind Black Wednesday

Britain was forced out of the EU's currency deal 20 years ago, but what became of the key players?

Mark Leftly
Sunday 16 September 2012 17:32

Twenty years ago today, the pound was battered as currency speculators and recession prompted huge interest-rate increases in the hope that traders would be attracted to buy sterling.

They didn't: the pound could not stay within the lower boundary of the carefully fixed European exchange-rate mechanism (ERM). Betting against sterling's survival, George Soros made a name for himself by making more than $1bn out of the UK's embarrassment. It was Black Wednesday.

The UK was forced to withdraw from the ERM. The Government announced a rise in the base interest rate from 10 to 12 per cent, promising later the same day to raise the base rate again to 15 per cent. But dealers kept selling sterling, unconvinced that the Government would keep its promise. By the next day rates were back at 10 per cent but the damage was done.

Estimates have placed the cost to the taxpayer of that one day at as much as £27bn, though Treasury documents released in 2005 suggest it may only have been £3.3bn. That was the year that David Cameron became leader of the Conservatives, a good example of how some of the key figures involved that day didn't suffer permanent damage to their careers.

The foremost political figures, John Major and Norman Lamont, never recovered politically. Similarly, Gordon Brown struggled to recover from the run on Northern Rock, five years ago last week.

September is a blasted month for the economy. Four years ago, Lehman Brothers collapsed, which eventually sent the UK into recession.

Mr Brown has been fairly quiet since he was dumped from office two years ago as a result of those economic disasters. Perhaps, though, two decades from now, he will have recast his image as successfully as some of the major protagonists of Black Wednesday.

Ironically, what appeared to be the darkest episode in the UK's economic history was being rebranded last week as the moment that saved the economy. Arch-Eurosceptics last week suggested it should be renamed "Bright Wednesday". Six of the key players are unlikely to see it that way. Here we consider where they are now and how they look back on that day.

Where are they now?

George Soros

At 82, Soros remains one of the world's most respected speculators. "Black Wednesday has contributed to my personal fortune and therefore has increased my ability to do philanthropic work," he said in 1992.

Jacques Delors

The former French finance minister had been head of the European Commission for eight years by Black Wednesday. He had pinned much of his hope for a borderless Europe on the ERM. Now 87, Delors still pushes for a more integrated Europe and argues that speculators must be controlled. "We should have an international agreement to establish rules for the game," he said in 1993.

David Cameron

Arguably the most academically gifted PM since Harold Wilson. Footage shows him at 25 with Lamont on the day. He said in 2005: "We will never again take risks with people's putting economic stability at risk"

Norman Lamont

Now 70, and Lord Lamont of Lerwick, he was gradually rehabilitated, and is now president of the Economic Research Council. He said this year: "I don't agree that [that Wednesday] was entirely Black … we joined [the ERM] to get inflation down, and ... succeeded in that."

Eddie George

At the time, George was deputy governor of the Bank of England. Later a life peer, he died in 2009, aged 70. The day before Black Wednesday he famously suggested the worst was over: "It's been a bit of a battering but we're still in there with our troops intact."

John Major

Now Sir John. Just months before Black Wednesday Major won a majority at the general election. After losing in 1997, he became president of Surrey Cricket Club and earned a small fortune advising private-equity giant Carlyle Group. Major is now president of the right-leaning Bow Group think-tank. He said this year: "There are more myths about Black Wednesday than the Greeks ever created."

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