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Center for Global Development
The Special Relationship: A Brief History of US Aid to the UK
UK Prime Minister Keir Starmer has promised a return to “responsible global leadership,” hinting that there might be appetite for renewed ambition as a foreign aid donor. But few realise that the UK was itself a recipient of substantial overseas aid. As President Trump takes office, there is an opportunity to reassess the US approach to international partnerships based on interests. In this blog, we look at the foundations of the so-called “special relationship” between the US and the UK and undertake new analysis of US non-military financial assistance to the UK following the Second World War.
We find that the UK received a loan from the United States in 1947 that was the largest ever single-year financial transfer (in inflation-adjusted terms) that the United States has ever made. That support topped all other US Government foreign assistance for decades, and it took nearly sixty years to pay it off. We also look back at the United States's rationale for giving over $3.75 billion ($36 billion in 2019 terms).
Post World War II support to UK and others
The modern era of US foreign assistance starts after World War II, and begins with significant economic assistance to the European powers (UK, France, and Italy) and Japan and Taiwan. But no country received more assistance than the UK.
The initial loan to the UK was one (loan) payment of $3.75 billion ($36 billion in 2019 prices). The initial loan was worth 1.5 percent of US GDP at the time and with the UK economy a quarter of the size of the US’ (in terms of spending power), this effectively added over 6 percent to the UK’s total expenditure. If the loan’s terms were similar to those of a World Bank IDA loan, the grant-equivalent would be around half of the face-value.
It would be over 50 years before another country would match or exceed even the nominal value of this early contribution, when the United States provided $3.8 billion to Poland in 2003 (though this was military rather than economic worth $5.2 billion in 2019 terms) and a year later the United States provided $3.86 billion ($5.1 billion in 2019 terms) in economic assistance to Iraq (data here).
Figure 1:US Economic Assistance to the UKby Instrument (Constant 2019 USD billions)
https://www.cgdev.org/blog/special-relationship-brief-history-us-aid-uk
BOD
https://www.cgdev.org/page/board-directors
Board of Directors
Lawrence H. Summers (Board Chair)
Director of the National Economic Council for the Obama Administration from 2009 to 2011 and Secretary of the Treasury of the United States, from 1999 to 2001
Edward Scott (Chair Emeritus)
Founder, BEA Systems, Inc.; Co-Founder and Chair, Center for Global Development; Co-Founder, DATA (Debt, Aid and Trade for Africa); Founder and Chairman, Friends of the Global Fight
Amrita Ahuja
Director, Douglas B. Marshall, Jr. Family Foundation and Senior Adviser, CRI Foundation
Caroline Atkinson
Former Head of Global Policy, Google; former Deputy National Security Advisor for International Economics for President Barack Obama
Bertrand Badré
Managing Partner and Founder, Blue like an Orange Sustainable Capital
Afsaneh Beschloss
Founder and CEO, RockCreek
Nancy Birdsall
CGD President Emeritus
Brian Deese
Former Director, National Economic Council
Mary-Ann Etiebet
President and CEO, Vital Strategies
Debra Fine
Founder and Chair of Fine Capital Partners
Tony Fratto
Global Head of Corporate Communications at Goldman, Sachs & Co.
Stephen T. Isaacs
Former Chairman, Director, President, and Chief Executive Officer, Aduro Biotech (retired)
Donald Kaberuka
Former President and Chairman of the Board of Directors, The African Development Bank Group
David Marchick
Dean of the Kogod School of Business at American University
Robert McCarthy
Investment Advisor, Spinnaker Capital Group
Luis Alberto Moreno
Managing Director at Allen & Co., Former President of the Inter-American Development Bank
Bobby J. Pittman
Managing Director of Kupanda Capital
Shubhi Rao
Global Finance Executive, Board Member, and Advisor
Karen Spencer
Founder & CEO, Whole Child International
Judy Woodruff
Former Anchor and Managing Editor of the PBS NewsHour