Quote Originally Posted by js207 View Post
It was Major, not Thatcher, and it wasn't pride but their ERM obligations to other EU countries which required them to prop up the currency value - but yes, it was disastrously stupid to make the attempt (they managed to burn £3.3 billion before figuring that out!) - though in the long term, that damage 20 years ago is probably a fraction of the damage we'd have suffered if the crisis had hit later on when it was harder to escape, as Greece and Ireland have found.
The pride was in the decision to join the ERM at an unrealistic valuation fo the GBP. Once they had, in effect, bragged of the strength of their currency, they were committed to backing their boast with money. And not just their own money. I was following the crisis on the radio in the shop, and at one point a fellow in a sharp business suit asked me for the latest. When I told him interest rates had gone up to 15% he went white as a sheet.

And as many commentators pointed out at the time, if they had managed to stay the course it would have crippled our trade balance. I was one of many businessmen who were very relieved when the GBP was allowed to drop to a value where we could export again.