Boris Johnson could face his ‘Black Wednesday moment’

Former ministers from the Sir John Major era have claimed that Mr Johnson is heading for a disaster similar in scale to Britain’s exit from the European Exchange Rate Mechanism (ERM) in 1992. The crisis resulted in the Tories suffering a landslide defeat to New Labour at the 1997 general election.

David Davis, who served as a Europe minister in the Major government, warned: “The thing I am really worried about is that we have another ERM moment. It would be like Black Wednesday or Black April.”

Echoing his concerns, Sir John Redwood, who was promoted to the Cabinet following the ERM crisis, said: “It has all the hallmarks of a disaster about it.” 

On Thursday, Mel Stride, the Conservative chairman of the Treasury select committee, said it was his “personal view” that there was an “opportunity now to not go ahead with the national insurance rise in April… because of the cost of living pressures that there are”.

Suggesting it should be delayed by a year, he warned that as an inflationary measure, it would have knock-on consequences for the servicing costs of the national debt.

He predicted that the Chancellor would be able to hit his fiscal target for 2022-23 even without the additional money from an NIC bump, as Mr Sunak has “more headroom – about £13 billion” than forecast.

However, a source close to the Chancellor on Thursday night pointed out that debt interest payments reached their highest ever December level of £8.1 billion last month owing to recent rises in inflation, adding: “Total debt interest in 2021 was £21 billion higher than 2020.”