The global echoes of a British near-collapse

AS THE world’s policymakers gather in Washington for the International Monetary Fund’s (IMF) Annual Meetings, there is a historical curiosity to consider. Roughly every 15 years since the 1930s, Britain has experienced an autumn financial crisis and policy regime change that has foreshadowed global upheavals a few years later.

Britain abandoned the gold standard in September 1931; the United States followed in 1933. The sterling devaluation of September 1949 ended postwar hopes of a genuinely multilateral currency system and confirmed the dollar’s hegemony. The second postwar sterling devaluation, in November 1967, triggered a chain reaction that culminated in United States President Richard Nixon dismantling the Bretton Woods currency system in 1971.

Britain’s IMF bailout in September 1976 discredited Keynesian economics and led to the election of Margaret Thatcher, inspiring the monetarist revolution of Paul Volcker and Ronald Reagan. The breakup of the European exchange-rate mechanism on “Black Wednesday” in September 1992 forced France, Italy, Spain, and Greece to accept Germany’s economic dominance of Europe. And the run against Britain’s most aggressive mortgage lender, Northern Rock, in September 2007, became a template for the global financial crisis a year later.