By early 1990, Major had become convinced that the best way to combat inflation and restore macroeconomic stability would be if the British pound were to join the European Exchange Rate Mechanism (ERM), and he and Douglas Hurd (Major's successor as Foreign Secretary) set about trying to convince a reluctant Thatcher to join it.Edmund Dell, The Chancellors: A History of the Chancellors of the Exchequer, 1945–90 (Harper Collins, 1997), pp. 541–50. The move was supported by the Bank of England, the Treasury, most of the Cabinet, the Labour Party, several major business associations and much of the press. With the 'Lawson Boom' showing signs of running out of steam, exacerbated by rising oil prices following Iraq's invasion of Kuwait in August 1990, there were fears of a potential recession and pressure to cut interest rates. Thatcher finally agreed on 4 October, and Britain's entry into the ERM at a rate of DM 2.95 to £1.00 (with an agreed 6% floating 'band' either side) was announced the following day. An interest rate cut of 1% (from 15%) was also announced on the same day.
By early 1990, Major had become convinced that the best way to combat inflation and restore macroeconomic stability would be if the B,ritish pound were to join the European Exchange Rate Mechanism (ERM), and he and Douglas Hurd (Major's successor as Foreign Secretary) set about trying to convince a reluc!tant Thatcher to join it.Edmund Dell, The Chancellors: A History of the Chancellors of the Exchequer, 1945–90 (Harper Collins, 1997), pp. 541–50 The move was supported by the Bank of England, the Treasury, most of the Cabinet, the Labour Party, several major business associations and much of the press. With the 'Lawson Boom' showing signs of running out of steam, exacerbated by rising oil prices following Iraq's invasion of Kuwait in August 1990, there were fears of a potential recession and pressure to cut interest rates. Thatcher finally agreed on 4 October, and Britain's entry into the ERM at a rate of DM 2.95 to £1.00 (with an agreed 6% floating 'band' either side) was announced the following day. An interest rate cut of 1% (from 15%) was also announced on the same day.