UK to pay WW2 debt

2006-12-28 23:10

London - Britain will on Friday finally settle its World War 2 debts to the United States and Canada when it pays the last instalment on loans that helped defeat Nazi Germany and fund post-war reconstruction, said the treasury on Thursday.

"Friday's repayments are of $83.25m to the United States and $22.7m to Canada," said a spokesperson for the finance ministry.

The payments, to be made on the final working day of the year, are the last of 50 instalments since 1950.

The US loaned $4.33bn to Britain in 1945, while Canada loaned $1.19bn in 1946, at a rate of 2% annual interest.

After the payment on Friday, Britain will have paid back a total of $7.5bn to the US and $2bn to Canada.

200% national debt

The loans were granted to help Britain buy oil, food, weapons and other military equipment to continue the war effort, and were essential to post-war reconstruction following the 1939-1945 conflict.

"This week we finally honour in full our commitments to the US and Canada for the support they gave us 60 years ago," said economic secretary to the treasury Ed Balls.

"It was vital support which helped Britain defeat Nazi Germany and secure peace and prosperity in the post-war period.

"We honour our commitments to them now as they honoured their commitments to us all those years ago."

In 1950, Britain' s national debt stood at about 200% of Gross Domestic Product (GDP). Nowadays the comparable figure is 36.8%, said the Treasury.

There are still First World War debts owed to and by Britain.

However, since a moratorium on all WWI debts was agreed at the height of the Great Depression, no debt repayments have been made to or received from other nations since 1934.

- AFP