OK, it seems Nigel Lawson supported EMS as a way to control inflation, especially when domestic pressures made tight monetary policy difficult.
First of all, though, when Geoffrey Howe was Chancellor (1979-1983) he opposed a fixed exchange rate, for the following reasons
- The pound as a petrocurrency was too volatile
- We were already pursuing a strict monetary policy
- The rate proposed in 1982 was too high
- People might blame high interest rates (the government's choice) on EMS and turn them off the whole European idea
He only came to support it by 1984, one year into his Foreign Secretaryship.
Nigel Lawson supported fixed exchange rates as a way to stabilise prices and avoid excessive inflation.
Under the Bretton Woods system governments had the illusion they were pursuing domestic full employment policies, whereas in fact they were following some form of international monetarism.
In effect he saw it as an alternative to monetarism - controlling the 'money supply' - which was becoming very difficult with deregulation and the abolition of exchange controls; sources of credit were too diverse to control. His solution was fixing the pound to the stronger and more stable Deutschmark, making devaluation very difficult - and so incentivising companies and people to restrain costs.
The point is, first, that, for a mixture of historical, cultural and institutional reasons, Germany is able to maintain a reasonable degree of price stability; second, that recognising this, the financial markets attach greater credibility to a monetary policy based on adherence to the Deutschmark; and third that, within the ERM, companies know that if they fail to control costs they are unlikely to be saved from bankruptcy by devaluation.
In effect, he viewed the high pound as a positive because it 'squeezed inflation' out of the system.