This short briefing sets out how, even accounting for RPI inflation, the borrowing needed to win the First World War was just half the amount that was set out for the years following the 2008 Pre-Budget Report.
Shocking new figures from the TaxPayers' Alliance reveal that the borrowing plans announced in yesterday's Pre-Budget Report will run up double the debt that Britain incurred winning the First World War.
Total Debt increase 1914 – 1919 (2007 value): £255,106,544,018
Total Debt planned 2008/09 – 2013/14 (PBR): £512,000,000,000
(For full methodology, see Sources & Methodology)
William Norton, a Research Fellow at the TaxPayers' Alliance, said:
"British taxpayers enter this downturn like lions led by donkeys. Not only will full recovery take twice as long as the First World War lasted, but we are going to take on twice as much debt. Alistair Darling is sending the taxpayer over the top to face a financial Battle of the Somme."
Matthew Elliott, Chief Executive of the TaxPayers' Alliance, said:
"It is staggering that the Government plans to take on more than double the debt we needed to win the First World War. This avalanche of debt will place a massive burden on the shoulders of ordinary families for years to come. Alistair Darling's refusal to make the public sector share the pain of recession by cutting out wasteful spending will cost all of us dearly."
Sources & Methodology
1. The TaxPayers' Alliance is Britain's independent, grassroots campaign for lower taxes and better government.
2. The increase in debt during the First World War is from Earnest L. Bogart ‘Direct and Indirect Costs of the Great World War’, Oxford University Press, 1920, pg. 35 and 41 respectively. The increase in debt in 1919 values was $34.3 billion.
3. Figures in Earnest L. Bogart’s book are given in dollars. Dollar-pound exchange rates are taken from Lawrence H. Officer ‘Dollar-Pound Exchange Rate from 1791”, Measuring Worth, 2008, available from: http://www.measuringworth.org/exchangepound/. The dollar totals were translated into pounds at the 1919 exchange rate of £1: $4.43. This gives an increase in debt of £7.7 billion.
4. Adjusting for inflation was done using Lawrence H. Officer ‘Purchasing Power of British Pounds from 1264 to 2007’, Measuring Worth, 2008, available from:http://www.measuringworth.com/ppoweruk/. This gave an increase in debt, in 2007 prices, of £255.1 billion. Subsequent inflation, after 2007, to the years in which the Chancellor is expected to borrow will make a marginal difference to the overall comparison.
5. World War One was largely financed by borrowing. The £255bn borrowed made up 78% of the £327.4 billion cost of the war.