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…