Saturday, December 30, 2006

Britain finally pays off American Debt

Yesterday (Friday 29th Dec), Britain paid the final installment of the loan it took out in 1945 to finance the re-building of post-war Britain.

According to the Independent, the original loan of $4.34 bn is equivalent of £27bn today. The final installemnt payment was £43m to the USA and £12m to Canada.

Ed Balls, the Economic Secretary to the Treasury, said: "This week we finally honour in full our commitments to the US and Canada for the support they gave us 60 years ago.

"It was vital support which helped Britain defeat Nazi Germany and secure peace and prosperity in the postwar period. We honour our commitments to them now as they honoured their commitments to us all those years ago."

We still owe money for the First World War:

However, since a moratorium on all war debts was agreed at the height of the Great Depression in 1931, no debt repayments have been made to, or received from, other nations since 1934.

The Treasury points out that, at the time of the moratorium, Britain was owed more in war debt by other countries than it owed to America. In 1946, Britain's national debt stood at about 250 per cent of GDP. Today the comparable figure is 36.8 per cent.

250% of GDP!! It puts things in perspective doesn't it. All those doom-mongers who like to predict that Britain will "collapse" under her modest 36.8% of GDP debt (low by historical standards and low in comparison to other developed countries), should reflect on history and on where we are now and stop being so daft.


Political Umpire said...

Interesting. I have linked to this as a number of people have recently commented to me about a theory (of Niall Ferguson, prominently, I believe) that the US deliberately bankrupted Britain during the war in order to emerge as the pre-eminent world power and with Britain out of the way of its access to Middle Eastern Oil. Not much of a special relationship, then as now.

Anonymous said...

Read the terms's very interesting!