Postwar: A History of Europe Since 1945

by Tony Judt

The British economy did not initially do so very badly: in 1951 Britain was still the major manufacturing center of Europe, producing twice as much as France and Germany combined. It provided full employment and it did grow, albeit more slowly than everywhere else. It suffered, however, from two crippling disadvantages, one a product of historical misfortune, the other self-imposed. The UK’s endemic balance of payments crisis was in large measure a result of the debts racked up to pay for the six-year war against Germany and Japan, to which should be added the enormous costs of supporting an effective post-war defense establishment (8.2 percent of the national income in 1955, against a German outlay of less than half that figure). The pound—still a major unit of international transactions in the 1950s—was overvalued, which made it hard for Britain to sell enough abroad to compensate for sterling’s chronic deficit against the dollar. An island country, utterly dependent on imports of food and vital raw materials, Britain had historically compensated for this structural vulnerability by its privileged access to protected markets in the Empire and Commonwealth.