The high level of the Napoleonic military and financial threat concentrated the minds of different interests in Britain, ensuring broad cooperation. This enabled the government to tax the rich without serious resistance, thus furnishing the basis of war finance. Loans came from the City of London, which worked closely with the government. Contracts with contractors were generally well administered. Naval superiority enabled convoys to protect and maintain trade, and particularly to obtain specie from Mexico, much needed by Wellington’s armies in the Peninsula as well as for subsidies for continental powers. For the last two years of the war, the government had to deploy the talent and energy of Nathan Meyer Rothschild to ensure that the British army on the continent was paid. Despite periods of extreme political stress, financial confidence was never broken. Parts of industry thrived, trade flourished, infrastructure investment continued. The British economy finished the war in a healthy state, although the economic impact of financing the war had very long-term political effects.

The chapter begins by detailing the massive economic support packages announced as the first COVID-19 lockdown was imposed and the accompanying promise to provide the NHS with ‘whatever it takes’. It shows how Conservative small-state ideology was jettisoned and a ‘magic money tree’ found that pushed up the annual budget deficit from £55 to £355 billion, 17 per cent of GDP. It will suggest that, in the light of this, people might question how necessary the preceding years of austerity had been, arguing that austerity in fact lowered economic growth, failed to pay down any of the massive debt from the financial crash and was based on flawed analysis.It will strongly refute the idea that the unprecedented costs of the lockdown must now be ‘paid for’ and the reckoning must come soon. Using detailed historical comparisons and arguments about the peculiar opportunity that negative real interest rates provide, it shows that we can accommodate a rise in the national debt without yet more austerity cuts to public services. The costs of the pandemic response can and should be treated in the same way that the one-off costs of war were in the past – paid off over the long term.

This chapter explains how a distinct constitutional model of public finance developed in the UK between 1700 and 1900, focusing on the legal and institutional relationship between Parliament and the Treasury. After providing critical economic context regarding the financial activities of British governments, the chapter explains how the complex inter-play of taxation and appropriation legislation distributed financial authority between parliament and executive government. It then moves to survey the growth of statutory public borrowing, the law underpinning the Bank of England's public financing functions, the appointment of the Treasury at the financial apex of Westminster government and the growth of a settled system of public audit. Special attention is paid to a number of topics: appropriation legislation (annual and standing); time-limited taxation statutes; the Treasury's power to adjust parliament's approved expenditure (virement); the connection between annual appropriation legislation and the UK's 'National Debt'; the Bank of England's powers to finance government; and the complicated relationship between Treasury and Comptroller and Auditor-General.