Another way of looking at it is this: had the pound remained on the ERM, Britain would have remained on-track to join the Euro. Assuming no devaluation of the

Another way of looking at it is this: had the pound remained on the ERM, Britain would have remained on-track to join the Euro. Assuming no devaluation of the pound (the incident that caused Britain to leave the ERM), the pound would have become part of the Euro at a ruinously high exchange rate relative to the Deutschmark. In the financial collapse of 2008, Britain would not have been able to lower interest rates or run quantitative easing. This is basically the predicament that Spain, Italy and Greece are in (though Greece has other problems). They have been forced to carry out "internal devaluation" by cutting spending and wages, and due to the sticky prices effect this basically means making very large numbers of people unemployed. Of course, you could argue another counter-factual, that Britain within the Euro would have tipped the balance of power in the ECB in favour of a much more doveish monetary policy from 2008, and thus saved Europe from calamity. It's really hard to speculate about these kinds of reflexive dynamics.