NEWS
15/09/2017 16:29 BST

What Was Black Wednesday? A Look At The Day 'That Put The UK On The Path To Brexit'

How different things could have been...

Saturday marks the 25th anniversary of Black Wednesday, which some suggest was where the journey towards the UK’s exit from the European Union began.

The day is comparable only to the collapse of the Lehman Brother in 2008 and, of course, the EU referendum result day itself in 2015.

Black Wednesday occurred on 16 September 1992, when the government was forced to withdraw the pound from the European Exchange Rate Mechanism (ERM).

Bloomberg via Getty Images
Norman Lamont was Chancellor went Black Wednesday hit the UK

The UK joined the ERM, which was created to reduce differences in exchange rates and achieve financial stability ahead of the launch of the single currency, in 1990.

The idea of the ERM was to tie currencies within a certain range to ensure stability, but the pound struggled to stay within this.

The UK government and Bank of England attempted to intervene to try to avoid the pound plummeting below the lower limit.

Tory chancellor Norman Lamont raised interest rates from 10% to 12% and then to 15%.

He also authorised the spending of billions of pounds worth of foreign currency reserves to buy up the sterling which being frantically sold on the currency markets.

PA Archive/PA Images
Black Wednesday was the day which put the UK on the path to Brexit

Tory chancellor Norman Lamont raised interest rates from 10% to 12% and then to 15%, and authorised the spending of billions of pounds to buy up the sterling being frantically sold on the currency markets.

His efforts were futile, however, and the pound dropped to below the ERM minimum.

Eventually, the government had to announce its withdrawal from the mechanism.

Many also suggest it was Black Wednesday that sowed the seeds of Brexit, since it turned those who were already Eurosceptics into full-blown Brexiteers.

Appetite for more cooperation with Europe was somewhat reduced, while sentiment towards it continued to sour among many.

The whole incident certainly ruined any chances the Tory government’s chances at the next general election, and in 1997, New Labour enjoyed a landslide victory with their largest Parliamentary majority to date.