8. 1990 to 1997: The Major Years

In November 1990 Margaret Thatcher stood down from the office of Prime Minister after losing first the confidence and then the support in Parliament of the Conservative Party’s MPs, which she needed in order to continue. John Major was elected her successor.

Despite several major economies showing quarterly detraction during 1989, the British economy continued to grow well into 1990, with the first quarterly detraction taking place in the third quarter of the year, by which time unemployment was starting to creep upwards again after four years of falling.

Economic growth was not re-established until early 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 Labor.

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 3 000 000 were unemployed.

The British pound was tied to EU exchange rates, using the German mark as a basis, as part of the Exchange Rate Mechanism （ERM）; however, 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 1992 ended British membership of the ERM. It also damaged the credibility of the Conservatives economic management, and contributed to the end of the 18 years of consecutive Conservative government in 1997.

Despite the downfall of the Conservative government, it had seen a strong economic recovery in which unemployment had fallen by more than 1 000 000 since the end of 1992 to 1 700 000 by the time of their election defeat.