Austerity

When the Second World War ended, the united Kingdom was close to bankruptcy. At the end of 1945 Attlee's government managed to secure a loan of over $3 billion from the United States Federal Reserve, negotiated by the world-famous economist John Maynard Keynes (and finally paid off in 2006). After 1948, Marshall Aid was also very important in keeping the country solvent.

Attlee's government used a number of measures to try to ease the transition from a wartime back to a peacetime economy, and to build up foreign currency reserves: controlling imports, concentrating investment in production for export, imposing currency controls, and regulating domestic consumption through a continuation of wartime rationing on food, clothes and fuel. These were the main forms of economic planning exercised by the Labour government.

Not only was rationing maintained, it was in some cases extended. Neither bread nor potatoes had been rationed during the war, but bread was rationed from 1946 to 1948, and potatoes for the duration of 1947. "Derationing" began in 1948, but was not complete until 1954 (three years into Churchill's second term as Prime Minister).

These "austerity measures" were the most unpopular aspect of Labour policy. The Labour Party won the 1950 general election with a much reduced majority, and when an early general election had to be called in 1951 (after Bevan's resignation and with several Labour ministers ill or dying) the Conservatives were returned to power.