Aftermath of United Kingdom
In the United Kingdom, funding the war had a severe economic cost. From being the world's largest overseas investor, it became one of its biggest debtors with interest payments forming around 40% of all government spending. Inflation more than doubled between 1914 and its peak in 1920, while the value of the Pound Sterling (consumer expenditure ) fell by 61.2%. Reparations in the form of free German coal depressed local industry, precipitating the 1926 General Strike.
British private investments abroad were sold, raising £550 million. However, £250 million in new investment also took place during the war. The net financial loss was therefore approximately £300 million; less than two years investment compared to the pre-war average rate and more than replaced by 1928. Material loss was "slight": the most significant being 40% of the British merchant fleet sunk by German U-boats. Most of this was replaced in 1918 and all immediately after the war. The military historian Correlli Barnett has argued that "in objective truth the Great War in no way inflicted crippling economic damage on Britain" but that the war "crippled the British psychologically but in no other way".
British private investments abroad were sold, raising £550 million. However, £250 million in new investment also took place during the war. The net financial loss was therefore approximately £300 million; less than two years investment compared to the pre-war average rate and more than replaced by 1928. Material loss was "slight": the most significant being 40% of the British merchant fleet sunk by German U-boats. Most of this was replaced in 1918 and all immediately after the war. The military historian Correlli Barnett has argued that "in objective truth the Great War in no way inflicted crippling economic damage on Britain" but that the war "crippled the British psychologically but in no other way".