John Major announced the United Kingdom’s exit from the Exchange Rate Mechanism on Black Wednesday.
Black Wednesday took place on September 16, 1992, when the British government withdrew the pound sterling from the European Exchange Rate Mechanism. John Major was prime minister, and Norman Lamont was chancellor of the Exchequer. The government had tried to keep sterling within its permitted trading band, but intense market pressure made the policy increasingly difficult to defend.
The Bank of England raised interest rates and intervened in foreign-exchange markets, yet speculation against the pound continued. After the withdrawal, sterling fell and the United Kingdom abandoned its ERM membership. The event damaged the government’s economic reputation, although the subsequent depreciation and lower interest rates later supported recovery.
Black Wednesday was a currency crisis rather than a conventional stock-market crash. It is sometimes grouped with market crashes because it produced major financial-market turmoil, but the central asset was the pound and the key policy issue was its exchange-rate regime.