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The ERM and the single currency

The Exchange Rate Mechanism (ERM) created in 1979 laid the foundation for the later Economic and Monetary Union (EMU). The UK joined the ERM in 1990 (and left in 1992) but obtained an opt-out from joining EMU in return for agreeing to the next major Treaty amendment, the Maastricht Treaty, in 1991. The Maastricht Treaty (the Treaty on European Union) also created the three-pillared structure which included intergovernmental decision-making in foreign and security policy and justice and home affairs matters.

This Treaty was controversial in the UK Parliament, because the Conservative Government under John Major had opted out its social policy provisions. In 1993 a confidence motion narrowly ensured parliamentary support for the Government's EC policy and the Treaty was subsequently ratified. The next Treaty amendment agreed in Amsterdam in 1997 included adoption of EU social policy provisions by the Labour Government of Tony Blair.

On 1 January 1999 the single currency, the Euro, was adopted as the official currency of 11 of the 15 EU Member States. EMU was completed in 2002 when Euro coins and notes entered circulation for Eurozone States.

Maastricht Treaty 

The Maastricht Treaty (full name: the Treaty on European Union) 1991 was a major amendment of the 1957 Treaty of Rome and highlighted the divide between Member States that wanted more integration (e.g. Germany) and those that wanted to co-operate on a voluntary and intergovernmental basis (e.g. Britain). The Treaty also established a timeline for Economic and Monetary Union (EMU) and set out the economic “convergence criteria” States needed to achieve and maintain, in order to adopt the single currency. The UK secured an opt-out from EMU.

The Maastricht Treaty also officially changed the name of the EEC to the European Union (EU).

After a flood of selling the pound on foreign stock exchanges, Britain was forced to leave the ERM in 1992,  less than two years after joining. This day became known as ‘Black Wednesday', costing the UK Treasury £3.3 billion.

Single Market established

The Single Market was established in 1993, paving the way for the free movement of goods, capital, services and people.

In December the EU concluded the Agreement on the European Economic Area (EEA Agreement) with Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland. All but Switzerland later ratified the EEA Agreement, which opened up the internal market to EEA members.

The Channel Tunnel was opened in 1994, linking Britain to mainland Europe.

In January 1998 the UK took over the EU Presidency for six months. The European Council was held in June in Cardiff.

Treaty of Amsterdam

In 1997 the Treaty of Amsterdam was agreed. This Treaty incorporated the Schengen provisions on the abolition of internal border controls and a common visa policy into the EU Treaties, with opt-outs for the UK and Ireland.

Introduction of EU single currency

On 1 January 1999 the single currency, the Euro, was adopted as the official currency of 11 of the 15 EU Member States, but as a ‘virtual currency' for commercial and financial transactions only.

At the Helsinki European Council in December 1999, the EU agreed to open accession negotiations with several East European states, Cyprus and Malta, and recognised Turkey as an applicant state.

Twelve European states adopted the Euro as legal tender on 1 January 2002, and began to phase out their national currencies. Britain, Sweden and Denmark did not join the single currency.

Page last updated April 2013

Brexit: research and analysis


Read research and analysis from Parliament's libraries and committees on how leaving the EU will affect different policy areas in the UK.

Brexit research and analysis