Saving the Pound

In June 2001, concurrent with the UK-wide General Election, voters in Britain also went to the polls to cast their ballots in the Euro Referendum. Tony Blair’s Labour government sought to get re-elected while also gaining public consent to take Britain into the Euro. The joint election & referendum had been delayed a month due to the Foot & Mouth Crisis. Turnout was high with the day not just combined with the Parliamentary election but that for local government too.

When the results came in, the outcome was rather unexpected.

Britons voted Yes to a Labour government but No to joining the Euro. The Pound was saved!


Several years before, when Blair was the Shadow Home Secretary in the John Smith led Labour, the then Conservative government of John Major had negotiated an opt-out for Britain on the matter of joining a single European currency. At Maastricht, the UK, along with Denmark too, chose not to sign up to the process of integrating economic management with Continental partners and ditching Sterling as the national currency. Labour had voted in Parliament against Maastricht and alongside Conservative Eurosceptic rebels had nearly won. Major’s government and then that one led by Blair – following Smith’s death in 1994 and then Labour’s win in ’97 – had stayed out where others had thrown their lot in together. Blair’s first Chancellor, Gordon Brown, had been opposed to joining the Euro along with significant portions of the Labour Party. Blair wanted for Britain to do so but it was a long-term project. Then came Christmas ’98 when Brown had a near-fatal heart attack. The Chancellor survived but retired from frontline politics come February ’99 fearful of losing his life to politics as Smith had done in the past. Jack Straw moved from the Home Office to the Treasury and Blair found him more agreeable to speeding up the Euro project. Brown’s much-heralded economic tests for the UK doing so were massaged to see the conditions near met. Blair fudged his way into making the case that Britain could, and should, join the Euro.

No referendum was initially intended by Blair on the matter of the Euro. Parliament was supposed to vote upon the matter and with the thumping majority gained in ’97, a Bill taking the country into the Euro should have been a sure thing. Internal party disagreement came in opposition to that. The usually friendly media, and then the Conservatives too, jumped on the bandwagon which at first came from key Labour backbenchers that the issue should be put to the voters. The Labour government of Harold Wilson had back in 1975 held a referendum on Britain staying in the Common Market (the EEC, back before it was the EU) because the issue was believed to be that important to get a mandate. Ditching the Pound was regarded in ’99 as being so important that the people should have a say.

Two recent referenda had been held by Blair’s government. In both Scotland and Wales, voters had been asked whether they wished to see devolved governments for their nations. They had answered in the affirmative with well-run Labour campaigns to see positive outcomes achieved. Blair believed that he could win the argument and the voters would support closer European integration for the UK… as long as it was phrased right. There were other, selfish issues too. The Conservatives had long been split over Europe – in fairness as much as Labour, just more out in the open – and their leader, the young William Hague, was extremely vulnerable on Europe. His party had Eurosceptics and Europhiles aplenty, all of whom were willing to play the drama out in public. Bashing the opposition was a big desire for Blair in agreeing with certain segments of his own party that a referendum was the best course of action to take.

Late in ’99, Blair’s government moved a Bill in Parliament to hold a referendum eighteen months hence. A long campaign was sought where the government would use its power and influence in office to win. The Prime Minister saw his place in history and it was one where he would take Britain to the very heart of Europe rather than overseeing it remain on the side-lines. His legacy would be leader who took Britain into the Euro.

2000 was unpleasant for this goal. Denmark too had a referendum on the same matter and the voters in that Scandinavian nation rejected their government’s wish to take them into the Euro. Ken Livingstone, quite the personification of the ‘old Labour’ which Blair’s revolution to transform the party into what he wanted it to be now once from what it had been, ran as an independent in the race for the newly-established post of London Mayor. He beat Labour’s candidate into third place in a humiliation for the Prime Minister. Against the Euro, and many aspects of European integration, Livingstone used that matter to help himself get elected in the UK capital. He motivated the Left with his stance against the Blair government and showed to all that this could be done. Nationwide fuel protests occurred and for a time, just a short period, Hague’s Conservatives overtook Labour in the opinion polls. Blair’s approval ratings returned to the lead afterwards yet Hague used that as a springboard to reinvigorate his party. Hague’s campaign against ditching the Pound got a shot in the arm. He moved to make it a centrepiece of the Conservative’s message despite the major fault-lines with his party over the matter of Europe.

Blair was urged to give up. The retired Brown spoke with him and told him to back away from the referendum less it see Labour lose not just that but Downing Street too. It was pointed out how the media had not been won over: their hostility had in fact only increased. Public polls on the Euro showed a split nation with support going up and down. Brown was given that audience but Blair ignored the advice. Into ’01, there was a concentrated effort to change people’s minds. Spin, spin, spin… Downing Street really went for it. Positive, encouraging signs came especially when opposition to the Euro was spun as irrational and xenophobic. Hague was still not regarded as a real threat and the Conservatives were having their expected internal arguments about Europe out in the open once more. Memories of Denmark’s No faded a bit and Livingstone was busy in London.

The date for the Euro Referendum had been arranged for May 3rd. There was no General Election which had to be held until the following year yet incumbent governments in Britain usually hold them every four years rather than wait until the fifth year. Wide expectation had been that Labour would call for a General Election to coincide with the Euro Referendum, something which many critics called a cynical attempt to fix the outcome of the latter by tying it to the former. Such an accusation was denied by the Blair government… just not as strongly as it would have been should that be an outright lie. Blair did what was expected and requested that Queen dissolve Parliament for a General Election to be held in May. It was a brazen move, one full of self-confidence from a government determined to get its way. Then came Foot & Mouth. That livestock disease struck in early ’01 and was out of control by the beginning of April. Nationwide campaigning couldn’t take place at such a time and so a delay was called for the casting of ballots. June 7th it would be instead.

Such a delay was a disaster for Blair. It gave the No campaign time to get its house in order. From across the political spectrum, there was opposition to Britain joining the Euro. Politicians and public figures were at each other’s throats on other matters but when it came to saving the Pound, they found a common cause. Blair had relied upon that division before more important though. However, a five week extension to the campaign was what No needed. Yes was rather slick and driven by spin coming from Downing Street but concessions and talks among the leading lights in No came during that delay on the referendum. They stopped fighting each other and instead united as one. It was an alliance of convenience with enemies putting down their swords: what enemies many of them usually were too! Opposition to not just the Euro but the EU as a whole brought this about. Opinion polling a month ahead of the rearranged vote pointed to Downing Street finally bringing the public around to the idea of the UK adopting the Euro. There was just the one opportunity to stop that… and give Blair a bloody nose as well.

In the days leading up to the vote, it became apparent in Downing Street that the public mood had swung back once again against adopting the Euro. Britons were going to still vote for Labour, giving Blair a big majority in Parliament, but they were minded to save the Pound. The spin machine went all guns blazing, pulling out all the stops. It wasn’t enough though. On the night of the 7th, and into the early hours of the 8th, Labour MPs were voted back into office but the Euro Referendum had gone the other way. Blair won another overwhelming majority to knock Hague back on his heels yet couldn’t convince the same voters to back his government’s position on the Euro. On that, Britons went against him with No attaining fifty-seven per cent of the public vote.


In light of the defeat in the referendum, calls were made for Blair to resign. He batted them aside though and carried on. His government’s agenda was more than just the Euro and he’d soundly defeated the Conservatives – Hague resigned afterwards – at the polls. Political dramas went on all summer but in Downing Street the Prime Minister stayed.

That September, 9/11 happened. The world changed and the matter of defeat in the Euro Referendum became of less importance to the UK than it had been before.

Wow, that looks quite interesting indeed!

   James G ,