Editing Norman Lamont (section)

===Exchange Rate Mechanism exit===
Within the constraints of the ERM, sterling interest rates were cut seven times in 1991, falling from 14% to 10.5% in September, with inflation halving from 9.0% to 4.5% over the course of the year, leaving real interest rates just 0.5% lower.<ref name="bankofengland.co.uk"/> The scope for swifter cuts in interest rates was squeezed by an event that few had anticipated when Britain joined the ERM: based on OECD indices of consumer prices, inflation in Germany, which had been 2.7% in 1990, rose to 5.1% in 1992, whilst in Britain inflation fell from 7.0% to 4.3%.<ref>{{cite web |url=http://stats.oecd.org/wbos/Index.aspx?querytype=view&queryname=221 |title=(downloaded on 24 April 2009) |publisher=Stats.oecd.org |date=30 March 2009 |access-date=30 May 2010 |archive-date=21 April 2009 |archive-url=https://web.archive.org/web/20090421095219/http://stats.oecd.org/wbos/Index.aspx?querytype=view&queryname=221 |url-status=live }}</ref> In response, the [[Bundesbank]] increased its discount rate from 6.0% in 1990 to 8.75% in July 1992, creating the conditions for the turbulence the ERM was to experience later that autumn.<ref>{{cite web |author=Deutsche Bundesbank |url=http://www.bundesbank.de/statistik/statistik_zeitreihen.en.php?func=row&tr=su0112 |title=BBK - Statistics - Time series database |publisher=Bundesbank.de |access-date=30 May 2010 |url-status=dead |archive-url=https://web.archive.org/web/20090707234325/http://www.bundesbank.de/statistik/statistik_zeitreihen.en.php?func=row&tr=su0112 |archive-date=7 July 2009 }}</ref>

Despite the Conservatives' surprise victory in the April 1992 general election, for these reasons, the ERM policy proved increasingly unsustainable and collapsed on [[Black Wednesday]], when Lamont was forced to withdraw the pound from the ERM despite assuring the public that he would not do so just a week earlier. He faced fierce criticism at the time for his apparent insouciance in the face of the collapse of the stated central plank of his economic policy. Later that month, at a press conference in the garden of the British embassy in Washington, DC in response to a question as to why he appeared so cheerful, Lamont commented that it was a beautiful morning, adding, "My wife said she heard me singing in the bath this morning," a response which led to the story that he was singing in the bath with happiness at leaving the ERM.<ref>Norman Lamont, ''In Office'', Little, Brown and Company (1999), p. 279.</ref> After Major left office and published his memoirs, Lamont publicly denied Major's version of events, claiming that Major had effectively opted out of his responsibilities and left Lamont to carry the can for that day's actions. On the evening of Black Wednesday and for days after, Major contemplated resigning, drafting a statement to that effect, but wrote Lamont a note instructing him not to resign.<ref>John Major, ''The Autobiography'', HarperCollins (1999), pp. 334–336.</ref>

Major's verdict on the ERM was that it was the medicine that cured Britain of inflation; "it hurt but it worked."<ref>John Major, ''The Autobiography'', HarperCollins (1999), p. 341.</ref> Speaking a few days after Black Wednesday, the Governor of the [[Bank of England]], [[Robin Leigh-Pemberton]], argued that "the decision to join the ERM two years ago in the circumstances; that, having joined, we were right to endeavour to stick it out; and that, in the circumstances which evolved, we were right to withdraw."<ref>Cited in Edmund Dell, ''The Chancellors'', HarperCollins (1996), p. 550.</ref> Lamont's view expressed in his memoirs was more nuanced: without the discipline of the ERM, the Major government would have given up on the fight against inflation before Black Wednesday; ERM membership delivered a sharp break in Britain's inflation performance; the judgment of the markets that the higher rates needed to maintain Britain's membership was undoubtedly correct; "the ERM was a tool that broke in my hands when it had accomplished all that it could usefully do."<ref>Norman Lamont, ''In Office'', Little, Brown and Company (1999), pp. 388–390.</ref> Sir [[Alan Budd]], the Treasury's Chief Economic Adviser during the period and later appointed by [[Gordon Brown]] to the [[Monetary Policy Committee (United Kingdom)|Monetary Policy Committee]], in an economic assessment of Britain's membership of the ERM, has written, "although it was certainly a political disaster, the case can be made that it was an economic triumph and marked the turning point in our macro-economic performance."<ref>Alan Budd, 2004 Wincott Lecture in ''Black Wednesday'', [[Institute of Economic Affairs]], (2005), p. 15.</ref>

During the autumn of 1992, Lamont became a press target in a string of largely fabricated stories: that he had not paid his hotel bill for "champagne and large breakfasts" from the Conservative Party Conference (in fact his bill had been forwarded on for settlement); that he was in arrears on his personal [[Access credit card]] bill (true); that in June 1991 he had used taxpayers' money to handle the fall-out from press stories concerning a sex therapist, who was using a flat he owned (the Treasury contributed £4,700 of the £23,000 bill which had been formally approved by the Head of the Civil Service and the Prime Minister;<ref>1992/93 HC 383 (Select Committee on Members Interests).</ref> there was never any suggestion that he had ever met her); and that he had called at a newsagent in a seedy area of Paddington late at night to purchase champagne and cheap "[[Raffles (cigarette)|Raffles]]" cigarettes. The last story turned out to have been partly invented (Lamont only purchased three bottles of wine).<ref>{{cite news |last1=Braid |first1=Mary |title=The beleaguered Chancellor: Fresh till receipt aims to quash speculation |url=https://www.independent.co.uk/news/uk/the-beleaguered-chancellor-fresh-till-receipt-aims-to-quash-speculation-1560736.html |archive-url=https://ghostarchive.org/archive/20220614/https://www.independent.co.uk/news/uk/the-beleaguered-chancellor-fresh-till-receipt-aims-to-quash-speculation-1560736.html |archive-date=June 14, 2022 |url-access=subscription |url-status=live |access-date=May 11, 2022 |work=[[The Independent]] |date=December 1, 1992}}</ref><ref>Norman Lamont, ''In Office'', Little, Brown and Company (1999), pp. 313-316.</ref>