Six Days in September: Black Wednesday, Brexit and the Meaning of Europe
by David Marsh, William Keegan and Richard Roberts
Published by OMFIF, £20
(Buy at Amazon)
On 16 September 1992, the UK was forced to leave the European Exchange Rate Mechanism after abandoning efforts to support sterling against the deutschmark.
This new monograph from the Official Monetary and Financial Institutions Forum, a think tank, looks at the history and consequences of this episode: why Britain joined the ERM, why it left and how the crisis affected the future of Europe, including the UK’s recent decision to quit the European Union.
While the authors are not the first to argue that Brexit has its roots in Black Wednesday, they take a novel approach. Instead of focusing on how it stirred British antipathy towards the EU, they argue that the main effect was to accelerate European integration.
In their view, policymakers concluded that, if a currency peg was vulnerable to speculative attacks, then the only solution was a full single currency.
It’s an interesting argument, though one that is ultimately unconvincing, since ERM was always intended to be a precursor to monetary union. Had Britain stayed within the ERM, it would almost certainly have ended up joining the euro. Still, this is a well-written account that also looks at the history of attempts to manage currencies.