Foreign Developments: The Exchange Rate Mechanism

Question 1

When was the ERM created?

Answer 1

1979

Question 2

What was the purpose of the ERM?

Answer 2

To prepare for a move to a single European currency

Question 3

When did Thatcher agree to enter the ERM? (To the month)

Answer 3

October 1990

Question 4

What did the ERM do to exchange rates?

Answer 4

Make exchange rates similar across all EEC countries

Question 5

What did Thatcher think about the ERM?

Answer 5

She opposed it

Question 6

Why did Thatcher oppose the ERM?

Answer 6

She did not want Britain to adopt a single European currency

Question 7

What was a large economic issue in Britain towards the end of Thatcher’s third term?

Answer 7

Inflation

Question 8

What had caused a rise in inflation for Britain?

Answer 8

Lawson’s 1986 Budget

Question 9

What was inflation at in 1986?

Answer 9

3%

Question 10

How much did inflation increase on average per year after 1986?

Answer 10

2% increase a year

Question 11

What was inflation at by 1990?

Answer 11

10%

Question 12

What would happen for British currency if joining the ERM?

Answer 12

It would be kept at a high exchange rate

Question 13

What would be the impact of the British currency being at a hgih exchange rate?

Answer 13

It would increase the BoP deficit

Question 14

What was the BoP Deficit at in 1989?

Answer 14

£46 billion

Question 15

Which 2 individuals did Thatcher claim misled her into joining the ERM?

Answer 15

Nigel Lawson and Geoffrey Howe

Question 16

What was a long term impact of Britain joining the ERM?

Answer 16

There was an economic crisis in Britain in 1992

Question 17

When did Thatcher do the Bruges Speech? (To the month)

Answer 17

September 1988

Question 18

What did Thatcher say in the Bruges Speech?

Answer 18

She opposed the EEC attempting to become like the USA

Question 19

What did Thatcher state in October 1988? About the single European currency?

Answer 19

Britain would never be under a single European currency