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Britain’s outstanding First World War debt has finally been repaid after the Chancellor redeemed £1.9billion from a bond.

The 3.5% War Loan was the most widely held of any UK Government bond with more than 120,000 holders, or 60% of all holdings of government gilts.

It comes as the Government looks to remove all other undated gilts in its portfolio, some of which have origins going back to the 18th century.

About 97,000 of these investors held less than £1,000 and almost 38,000 holders owned less than £100, according to the Treasury.

The 3.5% War Loan was issued in 1932 by the then-chancellor Neville Chamberlain in exchange for the 5% War Loan 1929-47, which was issued in 1917 as part of the effort to raise money to pay for the First World War.

The Debt Management Office estimates that Britain has paid some £5.5 billion in total interest on the 5% and 3.5% war loans since 1917.

Current low interest rates mean the Government is able to refinance the debt with new bonds.

The Treasury is also looking to remove all six of the other remaining undated gilts in its portfolio, including some debt originally issued in the era of the South Sea Bubble in the 18th century.

The plan to repay the First World War debt was announced in December, when Chancellor George Osborne said: "We can, at last, pay off the debts Britain incurred to fight the First World War.

"It is a sign of our fiscal credibility and it's a good deal for this generation of taxpayers. It's also another fitting way to remember that extraordinary sacrifice of the past."