Economic developments

• ERM CRISIS

  • caused exports to become overpriced as pegged to value of DM
  • International bankers speculated against pound overpriced and it fell sharply
  • Raised interest leveils to 15%
  • Withdrew from ERM
• Unemployment u[ until 1992 hit 2.6 million - 1 million increase

  many trapped in negative equity

  • affected Tory voters unliked 80’s recession hit working class northerners
  • forced high public spending
• Impacts of black Wednesday

  • economic consequences short lived
  • political marred conservatives
  • Destroys trust in conservatives economic policy
  • Eurosceptic arguments strenghthen which divide party - Portillo vs pro Europe Heseltine
• By 1997

  • unemployment down
  • Car ownership up
  • Negative equity became thing of past