ABSTRACT
This chapter explains why the UK government progressively abandoned its monetarist path and why this change was strongly and unanimously denounced by the financial community only from 1988/89 onward. The announcement of UK decision to join the Exchange Rate Mechanism (ERM), though given so little emphasis in the reported statement, had taken 11-and-a-half years to be pronounced, years in which many had changed their ideas over the ERM issue. Thus, in 1990, considerations about the need to gather the full benefits of the 1992 single market appear to weigh at least as domestic economic considerations in the Confederation of British Industry's stance in favour of UK membership of the ERM and of full participation to Economic and Monetary Union (EMU) talks. A threat to veto EMU would be a futile gesture since the other eleven governments could always establish new arrangements outside the Treaty of Rome to create a single currency.
