‘Black Wednesday’: do you remember the first time?

by Stephen Tall on May 2, 2006

Over at PoliticalBetting.com, Mike Smithson makes a fair point about the Tories’ ‘Black Wednesday’ on 16th September, 1992 – when the British Government withdrew sterling from the ERM, and the date from which most commentators mark the Party’s collapse in popularity.

As he notes, though the Tories took a hit, they were by no means holed below the waterline. In the following six months, the Tories averaged 37% in ICM’s monthly tracking polls, trailing Labour by just 2%.

Though the effective devaluation of the pound was held to be a disaster for the Government, it did not necessarily seem so at the time. For a start, the Tories did not kop all the blame – the Germans were regarded by many as the villains of the piece for refusing to lower their high interest rates.

(There is a parallel here with the ordure that Tony Blair attempted to heap on the French in March 2003, when Chirac threatened to veto a second UN resolution authorising the invasion of Iraq. All British governments, seemingly regardless of hue, will at some point in their time in office attempt to blame Johnny Foreigner for this country’s policy disasters.)

More importantly, sterling’s departure from the ERM enabled interest rates to find their natural level, and helped kick-start the sluggish recovery of the British economy which might have been the Tories’ salvation.

Much of the summer of 1993 was dominated by the obsession the Tories’ Europhobic MPs developed with the Maastricht Treaty, aided and abetted by an opportunistic Labour Party, happy to support the Social Chapter in public, but vote against it in Parliament.

Yet even this did not scupper the Tories’ hopes entirely. A year after ‘Black Wednesday’, in October and November 1993, John Major’s party could still muster 34-36% of the public, compared with Labour’s 38-39%. There was no evidence yet of the landslide victory which was just 3½ years away.

Over the next few months, the Tories drifted down to 30%, Labour picked up to 42%, and the Lib Dems – riding high on the back of stunning by-election victories from the Tories at Newbury and Christchurch – were polling 20-27%.

What undoubtedly transformed the face of British politics was the arrival of Tony Blair as Labour leader, in July 1994, following John Smith’s premature death.

Over the next six months, the Tories averaged 31%, soon-to-be-New Labour 48%, and the Lib Dems back down to their (then) more usual 17%. That pretty much remained the story for the next 2½ years, though Labour lost a little of their popular support to the Lib Dems and Others during the election campaign itself.

What does this all mean? Well, I’m certainly not suggesting Black Wednesday was irrelevant – far from it. Polling evidence suggests it seriously undermined the Tories’ strongest election-winning card: that though they might be bastards, they were competent bastards.

When Norman Lamont and Ken Clarke subsequently presided over the beginning of this country’s longest sustained period of economic growth, their party felt no electoral benefits – because the country reasoned the upturn resulted from policies stumbled upon by the Tory Party only once their main economic strategy, British membership of the ERM, had failed.

But what I am arguing is that ‘Black Wednesday’ – though perhaps guaranteeing the Tories would lose the next election – was certainly not sufficient in and of itself for Labour to win it. What undoubtedly won the 1997 election for Labour was the Tony Blair phenomenon.

But, like all bubbles, it was doomed to burst. Now that it has, it will be fascinating to see what becomes of (New) Labour. Though the party will certainly be better off without Mr Blair as leader, it’s hard to see they will be much better off with anyone else in his place. And that’s a conundrum which should trouble Labour’s high command.