‘Black Wednesday’ in politics and economics is the name given to the 16th September 1992, when the British Government was forced to withdraw from the pound sterling from the European Exchange Rate Mechanism (ERM) after the value of the currency fell below the minimum agreed level.
The British Government estimated the cost of Black Wednesday to the British public purse to be £3.4 billion and trading losses in the city of London for August and September were estimated to be around £800 million. George Soros famously made over £1 billion in profit that day by shorting sterling.
This 1997 BBC documentary looks back at the events which had led up to Black Wednesday and the after effects. Ironically the event stabilized the British economy and brought about the low interest rates that the Bank of England had long been attempting to achieve by artificially inflating GBP prior to the crash. Due to the subsequent strong recovery of the British economy some economists now look back fondly at the day and refer to it as ‘Golden Wednesday’.