Following the Second World War, the United Kingdom faced a reconstruction challenge of mammoth proportions – approximately 30% of its housing stock and much of its infrastructure was damaged or destroyed, its industries were unable to meet the demand of the domestic economy, and its national debt amounted to over two and a half years’ worth of economic output. While the conventional story of Britain’s post-war recovery rightly emphasises the ambitions of postwar planners to reconstruct British society through direct public investment, Keynesian demand management, and by building the welfare state, little attention has been paid to institutions operating outside of the state’s core budget, or off-balance sheet fiscal agencies (OBFAs). By utilising the Monetary Architecture framework – a political-economic lens which views the global economy as a web of hierarchically-ordered interlocking balance sheets – this paper uses archival sources and original time series data to explore how elasticity space in Britain’s fiscal and monetary ecosystem was created for developmental ends outside of the core balance sheets of the Treasury and the Bank of England. We focus on two policy areas where the state sought to spur development without adding additional pressure on its already stressed core state finances – industrial policy, with institutions such as the Industrial & Commercial Finance Corporation, and housing policy, with institutions such as New Town Development Corporations. Our contribution on the use of OBFAs in Britain’s post-war economy is relevant to three strands of literature: on the historical use of off-balance-sheet financing mechanisms; on the institutional evolution of economic governance in Britain during the 20th century; and, on how state-led development interacts with different macro-financial regimes.
Co-authors:
Olan McEvoy, Global Climate Forum
Moritz Kapff, Global Climate Forum
Andrei Guter-Sandu, University of Bath
