Summary of Part I

Abstract

Part I has examined the way the Conservatives viewed European monetary cooperation at the turn of the 1970s and has chiefly focused on the views of the leading Conservatives and the UK monetary authorities. As discussed in Chapter 2, Heath and UK mandarins were aware that Britain was at risk of losing monetary sovereignty, with the 1968 Basle Agreement fostering the sense of its decline as the second reserve currency: ‘The present standard of living in the United Kingdom is to-day dependent on the tolerance of our creditors.’¹²⁴ While the collapse of Bretton Woods blighted sterling–dollar diplomacy, which had hitherto been considered the overriding relationship, EEC entry was envisaged as means by which Britain could regain monetary sovereignty, ‘at least to a degree which can be equated with the other leading industrial nations of Europe’.¹²⁵ That was different from Churchill’s ‘three circles’ approach in the arena of monetary diplomacy. It entailed a process in which Britain would explore the possibility of sorting out the sterling balances within the European framework: a European approach to sterling.