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Analysis
'An excellent and sobering book'

'An excellent and sobering book'

Review of Six Days in September: Black Wednesday, Brexit and the making of Europe

by Simon Bulmer in Sheffield

Thu 15 Mar 2018

Six Days in Septemberby William Keegan, David Marsh and Richard Roberts, is an excellent and authoritative book on an episode in the UK's relationship with the European Union that resonates strongly today in the context of Brexit. It is also a sobering book in that, amid fast-moving events, there is a story of policy failure and an unimaginable loss of UK reserves. Yet the policy story is accompanied by a strong feel for the individual policy actors, giving the account a colour that makes it so very readable. Somewhat surprising for me was the unexpected emergence of Norman Lamont, the former chancellor of the exchequer who is forever associated with his press conference in the Treasury courtyard amid national humiliation, as the UK politician who emerges with greatest credit.

The book is impeccably sourced in terms of its methods, with archives in the UK, France and Germany having been utilised. Furthermore, there are interviews with the full range of players that academics can only dream of.

This is not an academic monograph, so it is not designed to advance one particular explanation of the UK exchange rate mechanism crisis. However, there is support evidence offered for a number of different arguments in academia and politics.

The inside jacket is headed 'Britain's journey of semi-detachment' and the book fits in well with those interested in that trajectory. Amongst the relevant evidence are:

  • The failure to negotiate with EU partners about the rate at which the UK joined the ERM.
  • The failure of Prime Minister John Major's government – not least due to Major not wanting to jeopardise the outcome of the French referendum – to negotiate with other partners such Italy to find a wider currency realignment within the ERM (or for this to be offered, for that matter).
  • Later in the book Black Wednesday is presented as the first Brexit and there is certainly plenty of material here in relation to the emergence of the fissures in the Conservative party that Prime Minister David Cameron sought to bridge by calling a referendum after unexpectedly winning a clear majority at the 2015 election. The ERM dispute is one of the key underlying reasons for the referendum, although I don't think it featured much in the voters' minds.
  • Major's repeated attempts to lobby German Chancellor Helmut Kohl for policy change is part of repeated failings in Anglo-German diplomacy and bilateral relations. The Deutsche Bundesbank was independent; Kohl could not intervene. We find this kind of misunderstanding repeated in Cameron's renegotiations. In the post-Brexit era the view is repeatedly articulated that German (car) industry will lobby Chancellor Angela Merkel to make concessions on a trade agreement to avoid the loss of the UK market. This may well prove to be another failure to understand Germany. Sound money and European integration have been the two foundations of the Federal Republic. As the book shows, only France has a privileged relationship and that did not yield much influence over the imbalances in the ERM.
  • Particularly striking is the change in UK Treasury positions: from monetarism, through ERM membership to inflation-targeting under  Lamont. At each of these stages there are tensions between the prime minister and the chancellor (Nigel Lawson v. Margaret Thatcher and her adviser, Alan Walters; Lamont v. Major amid the crisis; then Kenneth Clarke and Major over independence for the Bank of England). Insights into ideas and their influence on policy plus patterns of cabinet governance abound in the book. It is again astonishing to recall that joining the ERM was not even discussed in cabinet, albeit on grounds of sensitivity. In the current context of Brexit negotiations the internal machinations of the government are conducted out in the open!
  • Germany is also featured strongly in the book. Here differences of view between  Kohl and the respective Bundesbank president are persistent: from the Bundesbank's opposition to the 1:1 exchange rate for the East German mark, through its strong critique of the idea of economic and monetary union. Particularly interesting for me was the way that Bundesbank President Helmut Schlesinger became more reconciled to EMU because of the ERM crisis affecting Italy, the UK, France, Spain and Portugal over 1992-93. For him EMU offered the stability that the ERM couldn't.

At the same as the book offers insights into arguments such as these, it also reveals the human dimension:

  • Lawson does not emerge with tremendous credit due to his tax-cutting and big bang policies undermining the Treasury's monetarist phase and then pursuing his covert policy of shadowing the Deutsche mark (a story broken by William Keegan) and infuriating Thatcher.
  • The insouciance of Kohl, who seems to turn pleading ignorance into a bargaining tool and has time to place a bet with David Marsh at the Maastricht European Council that the UK will have joined the single currency by 1997 (resulting in 6 bottles of wine being sent upon the loss of the bet!).
  • Above all sympathy goes to Lamont, who had nothing to do with the decision to join the ERM – a decision of Major in his brief period as chancellor – but has to deal with the ensuing chaos, including the somewhat unguarded intervention of Schlesinger in the run up to Black Wednesday. His account of waiting for a meeting with Major (who is having a long meeting with backbenchers while the Bank of England is burning through reserves at, presumably, millions per minute) is astonishing. And yet his inflation targeting policy sets the basis for a successful period of the UK economy that Kenneth Clarke and then Gordon Brown benefit from later on.

In short, through insights such as these, I found the book a fascinating account of an era I lived through and that has very great relevance to a series of political and academic debates that are with us today.

Simon Bulmer is Professor of European Politics at the University of Sheffield.

Purchase a copy of Six Days in September here.

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