In order to analyze and find correlations between the recovery histories of the UK and Germany, we analyze the following indicators of each of the countries:
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Population before and after the war
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GDP before the war and after
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Public debt before the war and after
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Degree of destruction
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Recovery funding
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Recovery principles
Great Britain
1) Population
After the end of the Second World War, the population of Great Britain was almost 49 million, which was about one and a half million less than in 1939. The peak drop was recorded in 1942 - about 44.3 million people.
2) GDP
In 1939, the UK GDP was 265.15 billion pounds. It should be noted that GDP showed growth until 1941. In 1945 this figure was 301.6 billion pounds. The fall continued until 1947 - 286.9 billion pounds. The British economy reached the level of 1941 already in 1951. And already in 1967, 20 years after the peak fall in 1947, the UK GDP was 554 billion pounds, which corresponds to an increase of almost 100%.
3) Public debt
During the war, Britain was forced to borrow a lot and often. The national debt rose from 136.6% of GDP in 1939 to 251.7% in 1946. However, after the end of the war, the debt decreased quite quickly and reached the 1939 figures already in 1955.
4) Degree of destruction
According to various sources, about 30% of all buildings in the UK were damaged by bombing. This is how the maps of London look like at the time, on which damage to the infrastructure was recorded.
5) Recovery funding
On July 15, 1946, Great Britain signed the Anglo-American loan agreement. According to this document , the US and Canada provided US$3.75 billion and US$1.19 billion, respectively. The loan was provided at 2% per annum for a period of 50 years (it was later extended and finally repaid only in 2006). Also, for the period 1948-1952, under the Marshall Plan, Great Britain received 3.1 billion US dollars. The distribution of the aid fund, according to the plan, between the European states looks like this:
6) Recovery
Back in 1944, the Greater London Plan was presented - a plan for the post-war reconstruction of London, developed by Patrick Abercrombie. The plan was based on 5 principles and was designed to address the city's 5 main problems:
- population growth
- provision of housing
- employment and industry
- rest
- transport.
On the paper version of the plan, in charge, the legendary phrase was written: “All things are ready if our minds be so” - everything is ready if our minds are like that.
Even earlier, at the end of 1942, the famous The Beveridge Report was published - a report by William Beveridge, describing the difficulties that Britain would face after the war and options for solving these problems. Beveridge identified five great evils: poverty, extreme want, ignorance, idleness, and disease. The reforms proposed by Beveridge were actively used by Clement Attlee.
In 1946, the ambitious New Towns Act was passed, giving the government the power to build new towns on any piece of land. As a result of the implementation of this bill, 28 new cities were built, 14 of which were built between 1947 and 1950.
The recovery of Great Britain after the war was also characterized by rigid centralization. The authorities tried to maximize the concentration of resources for a quick recovery. Not without unpopular measures - the widespread nationalization of key sectors of the economy, such as railways, energy, gas and even coal.
A wide social package was developed and provided, including unemployment benefits, pensions and free medical care. Compulsory free education up to 16 years of age was introduced, and a large number of new educational institutions were created.
One way or another, it cannot be said that after the war, Great Britain demonstrated a rapid systemic growth of its economy - a changeable increase from 2 to 5% per year. This is what the chart of annual GDP growth in the UK looks like:
Germany
1) Population
The population of Germany in 1939, according to various sources, amounted to about 70 million people. The human losses of Germany in the war amounted to about 7.7 million people, of which 5.5 million were military and 2.1 million civilians.
2) GDP
The level of Germany's GDP, despite the horrendous depletion and consolidation of spending in favor of military needs, during the war years was stable and even showed growth. In 1945, it was about 14% less than in 1938.
3) Public debt
Since the Third Reich ceased to exist with the end of World War II, the national debt of defeated Germany was expressed in the amount of reparations that the new state formation should pay to the victorious and affected countries. In this vein, it is logical to talk about LONDON DEBT AGREEMENT 1953 - the London Agreement on Germany's external debt, which revised the claims made against Germany following the Yalta and Postdam conference and adjusted the volume of reparations in correlation with Germany's solvency.
As a result of the deal, West Germany pledged to repay the restructured debt outstanding from the First World War (about 16 billion marks, which is approximately equal to $ 3.9 billion), and also about 16 billion marks of debt that arose after the Second World War. According to the agreement, the total amount was reduced by almost 50%, in addition, payments were to be made at the expense of German exports. Reparations payments should not exceed 3% of export income, which created a strong incentive for creditors to import goods from Germany.
A detailed analysis of the London Agreement was made by Yale University.
4) Degree of destruction
As a result of the war, about 20% of the housing stock in Germany was completely destroyed. According to the American economist David R. Henderson, food production in 1947 was only 51% of the pre-war level, and the official food ration established by the victorious countries varied from 1040 to 1550 calories per day. This is how the map of destruction looks like according to the ECINEQ report .
5) Recovery funding
The resources of the losing Germany were very, very limited. Purely in monetary terms, under various programs, Germany received a little more than $ 5 billion from the United States for the period 1946-1961. As for the Marshall Plan, this per capita aid amounted to only $12.
6) The recovery and economic miracle of Germany.
From 1947 to 1950, the average annual growth of the West German economy was 13.4%. From 1950 to 1960, the average annual growth was 8%, after which it decreased to 4.6% in the 1960s.
What allowed Germany to rebuild its economy so quickly?
The leaders of post-war Germany were forced to take risky and unpopular measures. A harsh system of limiting monopolies was adopted. An independent central bank was created. Many of the measures proposed by the German reformers did not find support among the Allies, who exercised control over the German territories.
Like removing price controls, for example. However, the introduction of a new currency - the German mark, a colossal tax cut and maximum deregulation allowed for almost a few months to revive production within Germany. The new currency was introduced on June 21, 1948, and by the end of 1948, industrial production was over 50% of its 1936 level.
According to various sources, the standard of living in Germany during the period 1950 to 1960 increased by 58%, which is more than 2 times more than in Great Britain (an increase of 25%).
What common? Recovery principles
1. Preparation of strategic recovery plans during the war.
2. Foreign aid is an important, but not the most important and main factor (the Marshall plan was less than 3% of the GNI of the recipient countries). Emphasis in the development of domestic production.
3. Effective work with creditors.
4. Liberalization and maximum freedom for the economy.
5. Effective antimonopoly institutions.
6. Willingness to take unpopular but effective measures.
7. Work with the domestic market. Special support programs for domestic manufacturers.
8. A number of global state economic projects, such as the construction of new cities, etc.
The future of the economy of post-war Ukraine directly depends on how important the above principles will be for us. Recovery after the war and the subsequent economic breakthrough is always associated with the same “superforce”. It is not in vain that when analyzing the documents of countries that have followed this path, we often come across the phrase “economic miracle”. But this is a miracle that is quite algorithmic and understandable. It is only necessary to designate this miracle as a goal, and use the principles that can realize this miracle as steps towards it.