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Black Wednesday, or the 1992 sterling crisis, was a financial crisis that occurred on 16 September 1992 when the UK Government was forced to withdraw sterling from the (first) European Exchange Rate Mechanism (ERM I), following a failed attempt to keep its exchange rate above the lower limit
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Commemorating Black Wednesday helps escalate media freedom awareness by highlighting contemporary challenges to press freedom. National Press Council chairperson Jos Charle highlighted that the media industry is in decline and that threatens media independence.
- Understanding The 1992 Crisis
- Changes Since Black Wednesday
- But Is The Pound Faring Worse Now?
- Headline and CORE CPI Inflation Rate
- Bank of England Monetary Policy Response
It's important to understand that in the early 1990s, the pound was not entirely free-floating. As part of the Exchange Rate Mechanism to help create European currency unity, it had been pegged to the German deutschmark (DM) since Britain joined the ERM in 1990. But inflation in the UK, at nearly 11%, was around three times that of Germany's, and B...
The economic policies that brought the pound into the ERM and subsequently saw it ejected were seen as a political disaster, and the Conservative Party that had governed the UK since 1979 lost at the 1997 general election, despite an economic revival in the mid-1990s. The new Labour government gave the Bank of England an independent mandate and the...
The following charts will help explain the current GBP crisis – similar in some ways to 1992 – but broadly speaking, a brand-new variety of currency crisis. Piero Cingari, Capital.com’s chief FX analyst, says: “The British pound is approaching the thirtieth anniversary of Black Wednesday in very bad shape, reflecting the sharp inflationary crisis t...
The two kingpins of UK economic activity, service sector output and consumer spending have also taken a hit in recent months, with purchasing manage index surveys showing both service and manufacturing sector activity is either contracting, or very close to it. Consumer confidence is at its lowest ebb since GfK started producing the data.
Thus, the pound is at risk, despite the Bank of England’s dual mandate to protect price stability and financial stability. The Bank can’t introduce stimulus to prop up the economy and the pound. “On the contrary,” says Cingari, “it must continue to raise interest rates and shrink its balance sheet, to avoid inflation from spiralling out of control ...
- Neil Dennis
Sep 15, 2022 · But the true legacy of Black Wednesday is that it was the day the state fought the markets, and the markets won. Financial markets grasped power, and few have dared to challenge them since.
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