September 05, 2020 2 min read

BBC Radio 4 The Reunion Black Wednesday

16 Sep 1992 is remembered as Black Wednesday and I was privileged to be asked by BBC Radio 4 to share my memories of the events which happened that day.

Kirsty Wark brings together bankers, traders and politicians to recall the events of Black Wednesday in 1992, when the collapse of sterling forced Britain’s exit from the European Exchange Rate Mechanism.

In 1990, the ERM was a central part of the then Chancellor John Major’s anti-inflationary policy, to “place Britain at the heart of Europe”. But as Prime Minister in 1992, he had to make the painful decision to pull out after a frenetic day in the City. Sterling was pegged to the Deutschmark and the idea was to use intervention on the exchanges to hold it within set bands on either side of a central rate. But a wave of short selling, led by the American hedge-fund manager George Soros, overwhelmed the ability of the Bank of England to support the pound.

Chancellor Norman Lamont raised interest rates from 10% to 12%, then to 15%, and authorised the spending of billions of pounds to buy up the sterling being frantically sold on the currency markets. But the measures failed to prevent the pound falling lower than its minimum level in the ERM.

  • Home Secretary Kenneth Clarke spent the day in crisis talks with the PM.
  • Sir Alex Allan was John Major’s principle private secretary.
  • Mark Clarke was the foreign exchange dealer at the Bank of America who sold half a billion pounds, making £10 million for his employers in eight hours of trading.
  • Jim Trott was the Bank of England’s chief currency dealer who bought more sterling in a day than anyone before or since.
  • Jeff Randall was the Sunday Times City Editor who watched the drama unfold.

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