Britain’s Post-war Reconstruction and Colonial Policy, 1945–51

Abstract

For the Labour government which took office under Attlee late in July 1945, the economic consequences of the peace had to be faced far sooner than expected, for the end of the war suddenly arrived when Japan surrendered on 15 August 1945. American aid ceased almost immediately, on 21 August. Britain’s borrowings totalled £3500m, much of them in the form of sterling balances whose owners, along with the USA, wanted rapid repayment to assist their own reconstruction. With Keynes estimating Britain’s exports at £400m per annum as against her annual need for £1100m–£1200m of imports even to sustain wartime consumption levels (let alone press on with reconstruction), clearly Britain’s credit was extremely fragile. Reconstruction would take time, and the accumulation of further debt was unavoidable before a favourable balance of payments and trade could be restored. The continuation, even the extension, of wartime controls and austerity seemed inescapable, but in turn raised serious political problems given popular expectations.