ABSTRACT
The impact of the Second World War on the British economy was profound. The war effort, which was far more all-embracing than that of the First World War, imposed tremendous current and future burdens on the economy. The most serious legacy was the deterioration in the external position. Between the outbreak of war and the end of 1945 the cumulative current account deficit amounted to approximately £10,000 million (seeTable 7, p. 143). To finance this deficit (and a £100 million rise in gold and foreign exchange reserves) Britain had received £5,400 million in lend-lease supplies and mutual aid from the USA and Canada respectively, sold £1,000 million of some of the most lucrative prewar foreign investments, requisitioned £100 million of private gold and dollar balances, and increased the volume of short-term overseas liabilities (denominated principally in sterling) by a massive £3,700 million.1 On the domestic side the position was hardly better. To the losses sustained on external account had to be added the costs of internal disinvestment amounting to £3,100 million. Combining this with the former, approximate calculations carried out by the Treasury indicated that by the end of 1945 one-quarter of the country’s prewar wealth had been liquidated as a direct consequence of Britain’s commitment to the Allied war effort.2 <italic>UK Balance of Visible Trade 1938–45 (£ million)</italic> https://www.niso.org/standards/z39-96/ns/oasis-exchange/table"> Volume Index Exports Imports Visible Advarse Balance Exports Imports 1938 471 858 387 100 100 1939 440 840 400 94 97 1941 365 1,132 767 56 82 1943 234 1,228 994 29 77 1945 399 1,053 654 46 62 Source: Central Statistical Office, Statistical Digest of the War (1951), Table 142. Table reproduced by permission of the Controller of Her Majesty’s Stationery Office.
