World War I: Debts

House of Lords written question – answered on 9th December 2014.

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Photo of Lord Laird Lord Laird Non-affiliated

To ask Her Majesty’s Government whether any countries owe money to the United Kingdom as a result of the First World War; and if so, which and how much in each case.

To ask Her Majesty’s Government, further to the Written Answer by Lord Deighton on 20 November (HL2727), concerning debt for the First World War, what are the arrangements for repayment of the United Kingdom’s debt to the United States; and why that information was not included in the answer to the original question.

To ask Her Majesty’s Government, further to the Written Answer by Lord Deighton on 20 November (HL2727), concerning debt for the First World War, when was the most recent repayment made to the United States.

Photo of Lord Deighton Lord Deighton The Commercial Secretary to the Treasury

At the end of World War I, debt was owed between the UK and other countries. However, in 1931 President Hoover of the United States proposed a one year moratorium on all War debts, which allowed extensive international discussions on the general problems of debt repayment to be held. No satisfactory agreement was reached. In the absence of such an agreement no payments have been made to, or received from, other nations since 1934.

The most recent repayment made by the UK on its debt to the US from the First World War was made in the financial year 1932-33. More specific information on the date of this payment is not available.

The UK included the First World War debt to the US as part of the National Debt up until 1944-45, however all First World War debts to and from other nations are now effectively considered as having lapsed. Therefore, as explained in the answer to the original question, no arrangements have been made for repayment of the debt.

In addition, the government holds eight undated gilts in its debt portfolio, three of which stem from bonds originally issued to raise money to finance the First World War.

The Chancellor has announced that two of these undated gilts, 4% Consolidated Loan and 3½% War Loan, will be redeemed, on 1 February 2015 and 9 March 2015 respectively. These gilts account for some 99% of the bonds originally issued to finance the

First World War. The government has also announced a strategy to remove the remaining undated gilts from the debt portfolio when it is deemed value for money to do so.

The repayments on this debt will go to the holders of these bonds. The Treasury does not hold detailed information on the identity of organisations or individuals who own gilts, however information on sectoral holdings of gilts is published on a quarterly basis by the Office for National Statistics. The latest information on the breakdown of gilt holdings by sector, including a breakdown of non-UK resident holders of gilts by foreign central banks and other non-residents, is published by the ONS in Section 5.2.10 of its quarterly United Kingdom Economic Accounts publication.

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