Black Wednesday 'had good points'

AFTER a storm of criticism, former Chancellor Lord Lamont is defiant to the last. He claimed on Monday that there were some plus points from what has been described as the greatest political blunder of modern times.

Ten years to the day after Black Wednesday, when Britain abruptly exited the Exchange Rate Mechanism, the self-justification goes on.

Far from being a humiliating failure, Lamont insists: 'A lot of people would argue - and I would agree - this experience of the ERM was good and bad.'

The events of 16 September, 1992, left Lamont's economic policy in tatters. Bank of England reserves were plundered as the Government tried to prop up sterling against speculators including George Soros, who made £1bn betting against the pound.

But Lamont claimed that inflation would not have come down without the ERM. 'We wouldn't have done it on our own.' That must be scant comfort to the small businessmen bankrupted in the recession and the thousands who saw their homes slide into negative equity.

He said sterling's exit from the ERM meant 'Britain got the best of all possible worlds'. It led to the adoption of a new monetary policy 'which has lasted well to this day'.

Few will give credit for that to Lamont, sacked in May 1993. The new framework, which included Bank of England independence, helped usher in economic growth, falling unemployment and low inflation. Since the pound crashed out of the ERM in 1992, it has recovered all of its falls, stabilised, and is now trading at a higher level.

Lamont said the experience of the ERM confirmed his 'caution' about Britain going into the euro. An historical event on the scale of German reunification, which made the ERM unworkable, could happen again. 'Doesn't history consist of exceptional events?' asked Lamont. 'You can never tell what the next shock is going to be.'