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It may seem a strange thing that a mere ratio-the rate at which the British pound exchanges against other currencies-should have become a symbol of political failure for so many British governments. But it has. Harold Wilson never recovered from the devaluation of 1967, which he had spent three years trying to avoid. The next Labour administration never recovered from Denis Healey’s turnaround at London airport on the way to the 1976 IMF meeting to attend to a sterling crisis at home. It has been said that when Margaret Thatcher is dead the three letters “ERM” (exchange rate mechanism) will…

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