Black Wednesday cast a shadow that culminated in Brexit

theguardian.com:

This 16 September will mark 30 years since “Black Wednesday”, when the British pound was ignominiously ejected from the exchange rate mechanism (ERM) of the European monetary mystem. Not all anniversaries are occasions for celebration. This one certainly is not.

Black Wednesday was “a day of disaster” from which John Major’s government never recovered. It had been Major, as chancellor of the exchequer in Margaret Thatcher’s government, who led Britain into the ERM in 1990, overriding the objections of his balky prime minister.

Major saw pegging the pound to Germany’s deutschmark as a way to solve Britain’s economic problems at a stroke. Pegging to the deutschmark would supposedly import German monetary-policy credibility and subdue Britain’s chronic inflation. Emulating the model of Europe’s most successful economy promised to invigorate economic growth.

This, of course, was wishful thinking. Importing German monetary policy did not automatically give Britain Germany’s investment rates, skilled machinists, or export prowess. Moreover, no sooner was the pound pegged to the deutschmark than Germany experienced economic difficulties of its own, as the Federal Republic struggled to digest the former East Germany.

Those difficulties included inflation, which the Bundesbank moved to suppress, as was its wont, by raising interest rates. The Bank of England had no choice but to move in lockstep. European countries had eliminated their remaining capital controls as part of the single market programme. With finance now free to flow to higher-interest-rate jurisdictions, rates had to move together. If a country hesitated to match foreign rates, it would experience capital outflows and a deluge of currency sales.

And the Major government