We’ve paid for the War! (well, sort of)

The chancellor announced yesterday that, after a century, the Treasury is about to repay all the nation’s First World War debt.

The outstanding £1.9 billion of debt from 3½% War Loan bonds will be repaid next year.

George Osborne said:This is a moment for Britain to be proud of. We can, at last, pay off the debts Britain incurred to fight the First World War.

This is a cheering thought – until you read the small print. The government is going to buy back that debt so that it can raise more with another bond issue at today’s vanishingly low interest rates – so the debt hasn’t really been paid off after all, just shifted into a less expensive form, with some clever accounting.

Mind you, inflation has nearly got rid of the debt by itself. Think what 1.9 billion would have bought in 1918…

Details are here.


  1. Jane Evans
    Posted December 4, 2014 at 4:44 pm | Permalink

    Did the Germans finish (start?) paying reparations?

    • Posted December 4, 2014 at 7:42 pm | Permalink

      They definitely started, grudgingly. I don’t know what the final account was.

      • Roger
        Posted December 6, 2014 at 1:46 am | Permalink

        I think German reparations were paid off in the great inflation of 1923. The amount- vast in Deutschmarks- was minimal in other currencies.

      • Posted December 6, 2014 at 2:14 am | Permalink

        Yes – around 1998 or so (2000?) the German chancellor and/or Finance Minister publicly announced that ALL WW1 accumulated debts including payments to foreign governments had been paid off in full.  A great irony in that the loser in both catastrophic World Wars by the end of the 20th century was the single most powerful economic engine of Europe.John

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