When World War II ended in 1945, Great Britain was in complete disarray. The country, as most of Europe, had suffered terribly during the war. Although Germany never invaded Great Britain, the country withstood severe bombings and economic turmoil, the latter of which lasted into the Postwar period. In that environment, the Labour Party was elected to power in 1945, and, for the first time, held control of Parliament. Clement R. Attlee served as Prime Minister.

The British economy was near bankruptcy and running on a deficit. The American Marshall Plan (or European Recovery program) was not enough to stimulate a full economic recovery. A budget was constructed to counteract this problem as much as possible. Under the austerity plan, taxes were increased and governmental costs were cut. The former worked better than the latter, and inflation did decrease.

However, Great Britain had problems increasing productivity, especially in...