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Presentation on a Former Prime Minister (Sir John Major)

Short Introduction on John Major

Born

29 March 1943, St Helier, Carshalton, Surrey

Dates in office

1990 to 1997

Political party

Conservative

How He Got the Post

Early Career

• 1974: Stood for Parliament twice in St Pancras, losing both times
• 1979: Won Huntingdonshire

Becoming a Minister

• 1981: Became a ministerial aide
• 1985: Became a minister
• 1987: Entered Cabinet as Chief Secretary to the Treasury
  • Won the admiration and respect of his colleagues due to his ability to keep spending down
• 1989: Promoted to Foreign Secretary and Chancellor of the Exchequer soon after that.

• 1990: Thatcher unexpectedly announced her intention to resign.
  • With Thatcher’s unofficial support, Major won a three-way contest for the party leadership
    • Consequently became PM on November 28, 1990

How Often Did He Face a General Election

First General Election (1992)

Conservatives won, confirming his leadership.

What Major Events Occurred

Black Wednesday

• September 16, 1992
• A collapse in the pound sterling forced Britain to withdraw from the European Exchange Rate Mechanism (ERM).
• The U.K. was forced out of the ERM because it could not prevent the value of the pound from falling below the lower limit specified by the ERM.

European Exchange Rate Mechanism (ERM)

• Introduced in the late 1970s to stabilise European currencies.
• In preparation for the Economic and Monetary Union (EMU) and
• The introduction of the euro.
• Countries seeking to replace their currency with the euro were required to keep the value of their currency within a specific range for several years
• How Did He Deal With Major Events

What happened

• The U.K. had been in the European ERM for two years. However, the pound was depreciating and falling close to the lower limits set by the ERM.
  • The British government took steps to bolster the pound, including raising interest rates and authorizing the use of foreign currency reserves to purchase pounds.
• George Soros thought that the U.K. would ultimately fail in its attempts to prop up the pound.
  • Soros quietly accumulated a large short position against the British currency.
  • Then began speaking publicly about his belief that the pound could not be defended.
  • Other speculators also started betting against the pound, while investors sought hedges against a collapse in the exchange rate.
• The day before Black Wednesday
  • Soros' Quantum Fund began selling large amounts of pounds on the market
    • causing the price to plummet further.
• Although the Bank of England took steps to stem the sell-off, it was unsuccessful.
• On Black Wednesday, the Bank of England declared that the U.K. would leave the European ERM.
• Because of Black Wednesday, George Soros is known for "breaking the Bank of England."