How War Debt Felled the British Empire
Britain entered WWI as the world's creditor and left WWII as its debtor. No rival army did that. Compounding interest did. The same maths runs against you on a credit card.
British national debt before and after the world wars
Final WWII loan repayment to the US was made on 29 December 2006, six decades later.
Key takeaways
The British Empire's decline was significantly influenced by its war debts from World War I and World War II, demonstrating the dangerous impact of compounding debt.
Post-WWI, Britain's national debt ballooned to £7 billion, requiring substantial government spending on debt servicing and leading to economic stagnation.
The financial burden of WWII increased Britain's national debt to £21 billion, causing the devaluation of the pound and contributing to the loss of colonies.
Compounding works equally powerfully for or against individuals in personal finance: it grows wealth with investments but increases debt burdens with high-interest credit.