MADRID CONDITIONS

noun (Business World) (Politics) The set of conditions (laid down by UK Prime Minister Margaret Thatcher at the European summit held in Madrid in June 1989) for the entry of the UK into full participation in EMS. Etymology: Formed by compounding: conditions laid down at Madrid. History and Usage: Mrs Thatcher had claimed for some considerable time before the Madrid summit of June 1989 that the pound would join the ERM (the exchange-rate mechanism at the heart of EMS: see the entry for EMS) 'when the time is ripe'. It was in the Madrid conditions that she first stated explicitly when she thought that would be. The conditions covered five areas, the most important of which was that UK inflation must first be brought down to a level near to the average in other EC countries. In fact, when her Chancellor, John Major, took the UK into the ERM in October 1990, this condition had not been met--a circumstance which gave rise to much discussion of the Madrid conditions in the media. The other four conditions were that France and Italy should abolish exchange controls, that the single internal market of the EC should first be completed, that there should be progress towards a free market in financial services, and that competition policy should be reinforced. Last week the Chancellor, more cautious than the Foreign Secretary, but working with him, set out his stall. He stressed the importance of completing the 1992 single market and other Madrid conditions. Guardian 19 June 1990, p. 6