The history of British national debt can be traced back to the reign of William III, who involved City merchant syndicates and traders to offer for sale the government debt problem, which evolved into the Bank of England. In 1815, at the end of the Napoleonic Wars, British government debt peaked Ã, Â £ 1 billion (over 200% of GDP).
At the beginning of the 20th century, national debt was reduced gradually to about 30 percent of GDP. However, during World War I, the British Government was forced to borrow much to finance the war effort. National debt increased from £ 650 million in 1914 to Ã, Â £ 7.4 billion in 1919. During World War II, the Government was once again forced to borrow much to finance the war with axis powers. After the war, debt gradually declined as part of GDP, but in the 1970s, after the Sterling crisis, the British Government was forced to seek help from the International Monetary Fund (IMF).
As the 1980s and 1990s grew, the proportion of debt to GDP fluctuated up and down in accordance with how wider economic performance, remained relatively constant during the early 1980s recession, fell in the second half of the decade, and rose again as the Recession Beginning the 1990s reduced tax revenues. In the late 1990s and early 2000s, the national debt declined relative, dropping to 29% of GDP in 2002. It began to increase, despite sustained economic growth, as the Labor Government led by Tony Blair increased public spending. In 2007, the national debt has increased to 37% of GDP. The deficit continues to grow and, after the Great Recession began in early 2008, government borrowing and national debt has increased dramatically, reaching about 70% of GDP by the end of 2012.
Video History of the British national debt
Origins
The origins of British national debt can be found during the reign of William III, which involves city traders and merchants syndicate to offer for sale a government debt problem. The syndicate soon evolved into the Bank of England, eventually financing the Marxist Duke's war and then the Imperial conquest.
The establishment of the bank was designed by Charles Montagu, 1 Earl of Halifax, in 1694, for a plan that William Paterson had proposed three years earlier, but had not yet acted upon. He proposed a loan of £ 1.2 million to the government; In return the customer will be incorporated as a Governor and Bank of England Company with long-term banking privileges including note issues. The Royal Charter was awarded on July 27 through part of the Tonnage Act 1694.
Public finances were in a very poor condition at the time that the terms of the loan were that it should be serviced at a rate of 8% per annum, and there was also a service charge of Ã, Â £ 4,000 per year for the management of the loan. The first governor was Sir John Houblon, who was depicted in a record of £ 50 issued in 1994. The charter was renewed in 1742, 1764, and 1781.
The establishment of the Bank of England put an end to the 1672 default as the Great Stop of the Exchequer, when Charles II had suspended payments on its bills. Since then, the British Government will never fail to pay its creditors. About 3/7th of the UK's national debt in 1776 and 1/3 of major stocks such as East India Co, held by Dutch bankers.
In 1815, at the end of the Napoleonic Wars, British government debt peaked Ã, Â £ 1 billion (over 200% of GDP).
Maps History of the British national debt
The South Sea Company
Treasurer Lord Robert Harley founded the Southern Sea Company in 1711. Nominally, this is a trading company, but its main activity is government debt financing. In 1720, a bill was passed making the South Sea Company responsible for all national debt. This led to a frenzy of interest in the company, whose shares were ten times their original publishing price. Liquidity problems and destruction followed. The company was responsible for at least part of the national debt until it was abolished in 1850.
World War I
At the beginning of the 20th century, national debt reached about 30 percent of GDP. However, during World War I, the British Government was forced to borrow much to finance the war effort. National debt increased from £ 650 million in 1914 to Ã, £ 7.4 billion in 1919.
Britain borrowed heavily from the United States during World War I, and much of the loan from this period remained in strange weird circumstances. In 1931, President Herbert Hoover announced a one-year moratorium on repayment of war loans from all countries, due to the global economic crisis, but in 1934 Britain still owes US $ 4.4 billion of World War I debt (about Ã, Â £ 866m on 1934 exchange rate). Adjusted for inflation, which will amount to about 40 billion pounds today, and if adjusted for UK GDP growth, to around £ 225 billion. During the Great Depression, the British stopped paying for these loans, but outstanding bonds such as the War Crisis finally paid off in 2015.
Between the war
In the mid-1920s, government debt interest absorbed 44% of all government spending, comfortably exceeding defense spending until 1937 when, as the clouds of war drew closer, the armament began to take place in earnest.
World War II
During World War II, the Government was once again forced to borrow heavily to finance the war with axis powers. At the end of the conflict, British debt exceeds 200 percent of GDP, as has been done after the end of the Napoleonic Wars. As during World War I, the US again provided the main source of funds, this time through low-interest loans as well as through the Loan Lease Act. Even at the end of the war the British needed American financial aid, and in 1945 the UK took a loan of $ 586 million (about Ã, Â £ 145 million on the exchange rate of 1945), and in addition to the line of credit of 3.7 billion more (about Ã, £ 930 million at the 1945 exchange rate). The debt had to be repaid in 50 annual payments beginning in 1950. Part of this loan only paid off at the beginning of the 21st century. As of December 31, 2006, the UK made a final payment of approximately $ 83 million (£ 45.5 million) and thus spent the rest of its war loan from the United States.
Towards the end of World War II, Britain has collected debts of £ 21 billion. Much of this is held in foreign hands, with around £ 3.4 billion owed overseas (especially to creditors in the United States), the amount representing about a third of annual GDP.
1970s
After the war debt gradually declined as a proportion of GDP, but in 1976 the British Government led by James Callaghan faced a Sterling crisis where the pound value fell and the government found it difficult to raise enough funds to maintain its spending commitments.. The Prime Minister was forced to apply to the International Monetary Fund for a £ 2.3 billion rescue package; the biggest call on IMF resources until then. In November 1976, the IMF announced its terms for loans, including cuts in public spending, which basically took control of British domestic policy. The crisis was portrayed by the right wing press as a national insult, with Chancellor Denis Healey being forced to "rule" to the IMF.
2000s
In the late 1990s and early 2000s, national debt declined relative, dropping to 29% of GDP in 2002. After that began to increase, despite sustained economic growth, it increased to 37% of GDP in 2007. This is due to the additional government borrowing, largely due to increased spending on health, education, and social security benefits. Since 2008, when the UK economy slowed sharply and fell into recession as a result of the external-induced financial crisis, the National Debt has increased dramatically, initially from the large amount needed for bank bailouts, and then by the rapid decline of taxation on personal income and commercial activity.
In the 20-year period from 1986/87 to 2006/07, government spending in the UK averaged about 40 percent of GDP. As a result of the financial crisis of 2007-2010 and the end of the 2000s, the government spending of the global recession increased to a historically high rate of 48 per cent of GDP in 2009-10, partly as a result of the cost of a series of bank bailouts. In July 2007, the UK had a government debt of 35.5% of GDP. This figure rose to 56.8% of GDP in July 2009. As of June 2010 there were about 6,051,000 public sector employees in the UK (compared to about 23,107,000 private sector employees).
See also
- Public Sector Cash Requirements
- UK national debt
- All Government Accounts
Note
References
- Ferguson, Niall, Climbing Money: The Financial History of the World , Penguin Books, London (2008)
- Ferguson, Niall, Civilizations: The Six Killer Apps of Western Power , Penguin Books, London (2012)
External links
- Uk National Debt "Bombshell" - web page discusses National Debt Retrieved September 2011
- BBC Budget Overview 2009 Retrieved September 2011
- Telegraph.co.uk 2011 Budget coverage Obtained September 2011
- BBC 2008 Budget Overview Retrieved September 2011
- Budget 2008 UK Budget 2008 from HM treasury Retrieved September 2011
- HM Treasury All Government Account Development programs Retrieved September 2011
- The government hides billions wasted in public services, Sunday Times, May 1, 2005 Retrieved September 2011
- Better Government Initiative Experts say billions wasted on services, Daily Telegraph, November 24, 2007 Accessed September 2011
- Better Government Initiative Retrieved September 2011
- Coverage and budget analysis of PricewaterhouseCoopers Accessed September 2011
Source of the article : Wikipedia
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