Eichengreen, B. (1995) stated that Britain's sterling devaluations in 1949 were a continuation of the effect of World War-II. After the war both Britain and Germany imposed exchange control. In 1949 Britain joined the NATO1, when it was a founding member of the UN. The most important significance of the year in world politics was rise of the CPG2 in China. Chinese Communist Leader Mao Zedong and Soviet President Joseph Stalin signed a Sino-Soviet Treaty that endow with economic and military aid from the Soviet Union to the new state of communist. Simultaneously the Chinese Nationalists established a new regime in the island of Taiwan after defeated on mainland by the military forces of Communists. Britain was concerned in this region foe colonial economic interest with Hong Kong. 3
Clement, P. (2006) mentioned that the Labour Government was in the power at the period of devaluations in 1949 and endorsed a political agenda entrenched in collectivism such as nationalisation of industries and state tracked economy. Both wars had learnt the lesson of the potential benefits of greater state attachment. The post war economy emphasise the future direction and was by the Conservatives. Nevertheless, the initiatives of nationalisation were not successes due to lack of more degree of understandings the economic management emerged. The economy practiced theories of Keynes and sustained state involvement such as state direction rather than state ownership.
Reason of 1949 Devaluation
Kaplan, J. J. and Schleiminger, G. (1989) added that both the world wars had serious effect on the British Empire. The Indian independence in 1947 has introduced decolonisation and the wave of independence followed in many countries of the British Empire. Colonies helped the British Empire in the wars with commitment of independence. British power was failed to resist the tide of independence that began within the Labour Government4 and sustained up to the Conservatives.5 With the exclusion of Suez Crisis, the Conservative government introduced a central feature of foreign policy expression with wind of change.
Raghuram, G. R. and Zingales, L., (2003) and Schenk, C. R., (1994) agued that the breakdown of Empire, war expenditures and the material losses incurred in the both world wars had seriously injured the Britain economy. The prime effect was that British long-established markets were altering as Commonwealth states and finished mutual trade measures with regional countries other then Britain. Secondly the preliminary growths made by Britain in the world economy were relatively turn down to repairing some of countries infrastructure was gravely damaged in war. As well as they reclaimed a stake in world markets.6 Thirdly the British economy had shifted its structure to a service sector economy other then its industrial origins that caused some regions economically depressed. Finally part of political consensus supported