Major years (1990s)

Major years (1990s)

Starting the 90s, after losing the confidence and support of their party in the Parliament, Margaret Thatcher was substituted by John Major. The government also lost the previous popularity of their politics because a set of laws that introduce poll tax and the rise in the unemployment, the situation was close to a recession, so the population start to be nervous. The new government need to work into a hard recession, but a t the end of 1992, the inflation was reduced below 3%. 

Economic growth was not re-established until starts of 1993, but the Conservative government which had been in power continuously since 1979 managed to achieve re-election in April 1992, fending off a strong challenge from Neil Kinnock and Labour, although with a significantly reduced majority.

The early 1990s recession was officially the longest in Britain since the Great Depression some 60 years earlier, though the fall in output was not as sharp as that of the downturn of the Great Depression or even that of the early 1980s recession. It had started during 1990 and the end of the recession was not officially declared until April 1993, by which time nearly 3 million people were unemployed.

The British pound was tied to EU exchange rates, using the Deutsche Mark as a basis, as part of the Exchange Rate Mechanism (ERM), any way, this resulted in disaster for Britain. The restrictions imposed by the ERM put pressure on the pound, leading to a run on the currency.

Black Wednesday

In September 1992 ended British membership of the ERM. It also damaged the credibility of the Conservative's reputation for economic competence, and contributed to the end of the 18 years of consecutive Conservative government in 1997. The party had long been divided over European issues and many of these rifts within the party had still not been mended by 1997. 

Despite the downfall of the Conservative government, it had seen a strong economic recovery in which unemployment had fallen by more than 1 million since the end of 1992 to 1.7 million by the time of their election defeat just over four years later. Inflation also remained low, with the ERM exit in 1992 being followed by a gradual decrease in interest rates during the years that followed.
                                    

                                  The UK Conservative government was forced 
                                  to withdraw the Pound from the European 
                                  Exchange Rate Mechanism (ERM)

INTERESTING LINKS:
The Guardian compared Black Wednesday and Brexit in terms of inflation: Article link