History of the British national debt

After the war the debt gradually decreased as a proportion of GDP, but in the 1970s, following a Sterling crisis, the British government was forced to seek help from the International Monetary Fund (IMF).

The deficit continued to grow and, following the Great Recession beginning in early 2008, both government borrowing and the national debt have risen dramatically, reaching around 70% of GDP by the end of 2012.

This syndicate soon evolved into the Bank of England, eventually financing the military campaigns of the Duke of Marlborough and later imperial conquests.

The establishment of the bank was devised by Charles Montagu, 1st Earl of Halifax, in 1694, to the plan which had been proposed by William Paterson three years before, but had not been acted upon.

The founding of the Bank of England put an end to defaults such as the Great Stop of the Exchequer of 1672, when Charles II had suspended payments on his bills.

[7] [failed verification] Britain borrowed heavily from the US during World War I, and many loans from this period remain in a curious state of limbo.

Much of this was held in foreign hands, with around £3.4 billion being owed overseas (mainly to creditors in the United States), a sum which represented around one third of annual GDP.

The prime minister was forced to apply to the International Monetary Fund for a £2.3 billion rescue package; the largest-ever call on IMF resources up to that point.

[11] In November 1976 the IMF announced its conditions for a loan, including deep cuts in public expenditure, in effect taking control of UK domestic policy.

[12] The crisis was considered by much of the press as a national humiliation, with Chancellor Denis Healey being forced to go "cap in hand" to the IMF.

This was due to extra government borrowing, largely caused by increased spending on health, education, and social security benefits.

[14] Since 2008, when the British economy slowed sharply during the Great Recession, the national debt has risen dramatically, initially from the vast sums needed for bank bailouts, and then by the rapidly declining take from taxation on personal income and commercial activity.