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Core executive decision-making in economic policy in the UK is dominated by a Prime Minister-Chancellor axis and a set of constraints defined by vast flows of capital around foreign exchange markets. This thesis examines policy-making during the Thatcher governments in relation to the debate about ERM membership from 1979 to 1990. The analysis reconstructs the choices which faced the Thatcher governments given their economic and European policy interests and capital accumulation priorities, and investigates core executive actors' activity against this background. From the first Thatcher administration onwards, the core executive was seriously divided on ERM membership and the government was unable to pursue a coherent policy on the issue. As a result of both a power struggle between the Prime Minister and successive Chancellors and the retention of empirically untenable policy positions by core executive actors, economic policy-making failed as a judgement about effective means to ends. In this sense, decision-making became non-rational. Having renounced the potential benefits of ERM membership for most of the 1980s, the Prime Minister and Chancellor decided to enter ERM in autumn 1990 at a central rate of DM2.95 which served neither their own interests nor those of UK producers. The failure of the Conservative government to pursue an effective policy on ERM membership represented a failure to cope with or understand the implications for successful economic management of vast capital flows around foreign exchange markets.

Why has not Britain joined euro until now? This is an attractive issue. The purpose of this paper is to realize the real reasons. Hence, this paper analyzes the euro policies of Thatcher Government, Major Government and Blair Government. Before interpreting British euro policies, this paper explains the process of British EU membership. In addition, this paper introduces the story of EMU which is relative to euro. Most importantly, here this paper takes ¡§Europeanization¡¨ framework as a study tool to examine British euro policies. Through ¡§Europeanization¡¨ framework, this paper proposes many factors affecting British euro policies, including ¡§goodness of fit,¡¨ ¡¨veto players,¡¨ ¡§timing,¡¨ ¡¨political beliefs and organizational cultures,¡¨ ¡§the costs of institution changing¡¨ and so on. Thus, this paper concludes that Britain hasn¡¦t joined euro until now owing to many factors.

This thesis examines the measurement, applications and properties of consumer inflation expectations in the context of eight European Union countries: France, Germany, the UK, Spain, Italy, Belgium, the Netherlands and Sweden. The data proceed mainly from the European Commission's Consumer Survey and are qualitative in nature, therefore requiring quantification prior to use. This study first seeks to determine the optimal quantification methodology among a set of approaches spanning three traditions, associated with Carlson-Parkin (1975), Pesaran (1984) and Seitz (1988). The success of a quantification methodology is assessed on the basis of its ability to match quantitative expectations data and on its behaviour in an important economic application, namely the modelling of wages for our sample countries. The wage equation developed here draws on the theoretical background of the staggered contracts and the wage bargaining literature, and controls carefully for inflation expectations and institutional variables. The Carlson-Parkin variation proposed in Curto Millet (2004) was found to be the most satisfactory. This being established, the wage equations are used to test the hypothesis that the advent of EMU generated an increase in labour market flexibility, which would be reflected in structural breaks. The hypothesis is essentially rejected. Finally, the properties of inflation expectations and perceptions themselves are examined, especially in the context of EMU. Both the rational expectations and rational perceptions hypotheses are rejected. Popular expectations mechanisms, such as the "rule-of-thumb" model or Akerlof et al.'s (2000) "near-rationality hypothesis" are similarly unsupported. On the other hand, evidence is found for the transmission of expert forecasts to consumer expectations in the case of the UK, as in Carroll's (2003) model. The distribution of consumer expectations and perceptions is also considered, showing a tendency for gradual (as in Mankiw and Reis, 2002) but non-rational adjustment. Expectations formation is further shown to have important qualitative features.