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U.K. pays off Second World War loans

Ashley Seager

FOR MOST people the Second World War is a distant memory or relived through books or television. But for the British Treasury, the war only ended on Friday. British officials, at the push of a button, made two electronic transfers of so-called ``war loan'' across the Atlantic, marking the end of a chapter of British history that began in 1945. The final payments of the loans, to the United States and Canada, are not negligible — $83.25 million and $22.7 million respectively.

In 1945, Britain borrowed $4.34 billion from the U.S. consisting of a $3.75-billion line of credit and a "lend-lease" loan facility of $586 million. The following year, it accepted a $1.185-billion line of credit loan from Canada.

The money was primarily designed to assist in the post-war reconstruction of Britain's exhausted economy and shattered infrastructure. But the lend-lease loan related to wartime supplies already in transit from the U.S. under President Franklin D. Roosevelt's programme of the same name which began in 1941 and which ended abruptly shortly after VJ Day in 1945. Roosevelt famously said the scheme was like lending a neighbour a hosepipe to put out a fire.Repayments on the loans began in 1950, since when Britain has paid 50 instalments worth $7.5 billion to the U.S. and $2 billion to Canada at a 2 per cent rate of interest. —

© Guardian Newspapers Limited 2006

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