Britain: Debtor Nation

April 8, 1977

Report Outline
Aspects of the Economic Crisis
British Decline from Prosperity
Threat of National Bankruptcy
Special Focus

Aspects of the Economic Crisis

Coming Economic Conference in London

The international “economic summit” conference that will be held in London on May 7–8 is vitally important to Britain, the world's foremost debtor nation. With more than $20-billion in debts to foreign creditors, Britain appears to have staved off immediate financial disaster by staging a kind of “economic Dunkirk” this past winter. But critical problems continue to plague the British economy—widespread unemployment, a high rate of inflation, a balance-of-payments deficit—and Britain must depend on the other industrial nations of the West to carry it through the current crisis.

Other nations have come to Britain's aid in fear of the untold consequences of letting a major industrial country “go under.” Although many scenarios have been presented about the possible effects of national bankruptcy, no one can say for sure just how badly the world economy might be damaged. Moreover, many of the two dozen advanced industrial nations that compose the Organization for Economic Cooperation and Development are heavily in debt. John Fay, the OECD's chief economist, has estimated that their total debt will deepen by $25-billion to $30-billion this year and in each of the next few years. British Prime Minister James Callaghan has said that “1978 should be one of the most difficult years the world has ever seen.”

In contrast to the United States and West Germany, whose economies currently show strength and stability, many other industrial nations seem unable to overcome the cumulative effects of costlier oil imports. Although the Organization of Petroleum Exporting Countries (OPEC) quadrupled the price of oil in 1973 and 1974, the economic reaction was delayed for many countries. But, apropos of Callaghan's statement, there is evidence of crises developing not just in Britain but elsewhere. Although Britain's economic slide started well before oil price increases were imposed, other nations viewing the country's problem question whether they too may be forced by external factors to follow in the same pattern.

ISSUE TRACKER for Related Reports
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Nov. 05, 2010  U.S.-British Relations
Jan. 30, 1998  U.S.-British Relations
Mar. 08, 1996  The British Monarchy
Sep. 15, 1995  Northern Ireland Cease-Fire
Nov. 17, 1978  New Prospects for Britain
Apr. 08, 1977  Britain: Debtor Nation
Sep. 26, 1975  Britain in Crisis
Jun. 10, 1970  British Election, 1970
Oct. 30, 1968  British Economy Since Devaluation
Sep. 27, 1967  Britain in the 1960s: Descent from Power
Sep. 10, 1964  British Election, 1964
Jun. 24, 1964  British Commonwealth in the Postwar World
Aug. 09, 1961  Socialized Medicine in Great Britain
Jul. 19, 1961  Britain, the United States and the Common Market
Sep. 16, 1959  British General Election
Mar. 13, 1957  American-British Relations
May 10, 1954  Political Trends in Britain
Sep. 13, 1951  British Social Services
May 24, 1950  Sterling Balances
Feb. 08, 1950  British Election, 1950
Jan. 12, 1949  British National Health Service
Mar. 28, 1946  Sterling Area and the British Loan
Jul. 14, 1945  British Export Trade
Jun. 22, 1945  British Election
Jan. 01, 1943  Food Rationing in Great Britain
Apr. 19, 1941  Convoys for Britain
Jan. 02, 1941  Financing Britain's War Requirements
Aug. 26, 1938  Anglo-American Relations
Apr. 28, 1938  Economic Recovery in Great Britain
May 12, 1937  Britain's Intra-Imperial Relations
Sep. 09, 1931  Unemployment Insurance in Great Britain
Aug. 09, 1930  The Protectionist Movement in Great Britain
Sep. 10, 1929  The British Task in Palestine
May 06, 1929  The British General Election of 1929
Jun. 12, 1926  The British Trade and Financial Situation
May 07, 1926  Background of the British Labor Crisis
Oct. 17, 1924  British Electoral System and Political Issues
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Jan. 14, 1924  The British Labour Party
Economic Analyses, Forecasts, and Statistics
Regional Political Affairs: Europe