As a result of the two great wars in the 20th century, the UK’s national debt soared such that by the end of World War II, public net debt was well over 200% of GDP. In the period after this, despite the modified gold standard of the Bretton Woods system, the UK was able to work these debt levels down to well under 50% of GDP.
How did the British do it? It was mostly through a combination of currency depreciation and inflation. 100 pounds in 1945 are worth approximately 3200 pounds in today’s money.
Source: Time Series Chart of UK Public Spending, ukpublicspending.co.uk
About Edward Harrison
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.
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