This article assesses the impact of Marshall aid on the economy and politics of Britain in the 1940s. It draws on recent literature on the domestic policies of the Attlee government and on the general impact of Marshall aid on Western Europe, together with the notion of the ‘shortage economy’ developed by Kornai. The central argument is that the deployment of Marshall aid primarily to maintain British consumption levels derived not from a governmental disregard for the importance of reviving investment and industrial output, but from a realistic appreciation of the economic and political consequences of trying to hold consumption down to an excessively austere level.