Foreign Developments: The Exchange Rate Mechanism Flashcards
When was the ERM created?
1979
What was the purpose of the ERM?
To prepare for a move to a single European currency
When did Thatcher agree to enter the ERM? (To the month)
October 1990
What did the ERM do to exchange rates?
Make exchange rates similar across all EEC countries
What did Thatcher think about the ERM?
She opposed it
Why did Thatcher oppose the ERM?
She did not want Britain to adopt a single European currency
What was a large economic issue in Britain towards the end of Thatcher’s third term?
Inflation
What had caused a rise in inflation for Britain?
Lawson’s 1986 Budget
What was inflation at in 1986?
3%
How much did inflation increase on average per year after 1986?
2% increase a year
What was inflation at by 1990?
10%
What would happen for British currency if joining the ERM?
It would be kept at a high exchange rate
What would be the impact of the British currency being at a hgih exchange rate?
It would increase the BoP deficit
What was the BoP Deficit at in 1989?
£46 billion
Which 2 individuals did Thatcher claim misled her into joining the ERM?
Nigel Lawson and Geoffrey Howe
What was a long term impact of Britain joining the ERM?
There was an economic crisis in Britain in 1992
When did Thatcher do the Bruges Speech? (To the month)
September 1988
What did Thatcher say in the Bruges Speech?
She opposed the EEC attempting to become like the USA
What did Thatcher state in October 1988? About the single European currency?
Britain would never be under a single European currency
