Major Problems and Black Wednesday, 1992-97

Surprise Conservative victory. Used old fashioned 'soap box' politics. Labour too over the top and arrogant.

By Sept 1992, the pound (with several other currencies) was coming under pressure from foreign exchange speculators - trading at low level, close to min. allowable rate 2.77 marks.
Day started with wave of speculative selling. Gov. determined not to devalue and stay in ERM.
Chancellor, Lamont, increases interest rates - 10% -> 12% ->15% - hoped to persuade investors to buy pound again. B of E spent huge amounts buying pounds.
Pound continued to sink. Emergency meeting. Decide to withdraw - announced
Major disaster for party (pun not intended) - lost rep. for economic competence. Strengthened Eurosceptics and Labour opposition. Lost press support. Party divisions.
Although recovered well - less damaging than thought, maybe even beneficial.

Economic recovery accelerated. Reduced gov. borrowing and inflation. Unemployment down, productivity up (a little). Consumer spending, car ownership, house prices up. Business supportive of gov. policies.
Kenneth Clarke replaced Lamont as chancellor - confident, good communicator.
Took over when American economy coming out of recession.
British economy doing well - deregulation and flexible working practices - Germany doing badly.
Privatisation - coal in 1994, railways in 1996 (controversial) - were going to privatise Post Office - more shares in privatised industries - stock market up.

'Just think it through from my perspective. You are the prime minister, with a majority of 18... where do you think most of the poison is coming from? From the dispossessed and the never-possessed. Do we want three more of the bastards out there?'

Gets it through with vote of confidence in the end.