The Countdown to Devaluation

The starting-point was a change of sentiment after the announcement by the Prime Minister on 2 May that the United Kingdom would apply formally to join the Common Market. Such an application had been in the air since November 1966, when the intention to engage in renewed discussions with the EEC was made public. Although no official estimates of the balance of payments cost of joining the Community had been issued, it was known that it was likely to be substantial, and there was also a natural suspicion that, in view of this, Britain ’s entry might be made the occasion for a devaluation of the pound. Ironically enough, devaluation preceded by a week or so, not Britain ’s entry to the Common Market, but General de Gaulle ’s second veto.