in taxes and other revenues. Without U.S. and Canadian aid, Britain would have defaulted on its considerable debts. Even so, the flood of wealth out of the country was considerable. The winter of 1947 was probably the lowest economic point of the century. Fuel shortages, gas rationing, inadequate food and shelter, and one of the coldest seasons on record all added to the nation's problems. Unemployment reached 2.3 million, and the monetary crisis worsened.
On the political scene, to the surprise of the world, Churchill was swept out of office when his Conservative Party lost to the Labour Party in the elections of 1945. The Labour government relaxed restrictions on trade unions and embarked upon a program of nationalization. This program resulted in government ownership of the Bank of England and of the coal, electricity, and gas industries. The government consolidated the railroads into British Rail and the airlines into British Overseas Airways Company (BOAC). The most controversial takeovers were the iron and steel industries, which were profitable private enterprises. The government immediately encountered the difficulties of effectively running complicated industries, many of which were badly in need of modernization. Efforts to make these businesses profitable and competitive in the international market were hampered by outdated equipment and inadequate facilities.
In 1948 the most far-reaching of Britain's social welfare programs was established. The National Insurance Act of 1946 consolidated benefits involving maternity, unemployment, disability, old age, and death. The National Health Service, set up in 1948, provided free medical service for Britons. British socialists now boasted that citizens were cared for “from cradle to grave.” However, the price tag for both programs was far greater than anyone had anticipated, and the government immediately cut back on some services.
Gradually Britain's economy recovered. After 1948 the United Kingdom took advantage of the Marshall Plan, a four-year economic recovery program designed by the United States to revitalize the economies of European countries by making low-cost loans available for reconstruction. For all of the damage it had suffered, Britain had not experienced the devastation of other European nations such as France, and Britain soon reestablished its export industries.
After the war, Britain still played an important role in international affairs. In 1945 it became a permanent member of the Security Council of the United Nations. (The United Nations, or UN, is an international organization of countries that was founded in 1945 to promote world peace and cooperation.) As a member of the UN, Britain served as one of the countries that continued to occupy and rebuild Germany. The new Labour government attempted to maintain Britain's role as a world power by supporting a large overseas military presence in both the British colonies and Europe and by continuing a high level of military spending.