In the years following World War I, Britain experienced an economic downsizing. The trade relationships with her colonies that had made her the strongest power of the world had fallen into the hands of the United States and other younger countries. In addition, the preferred markets of the colonies were now making their own goods, further depressing BritainÆs economy. Without the export markets, Britain could not even fully employ her own population. The causes of the change included rampant British domestic inflation, which increased the cost of British goods relative to those of other countries; and the decentralization of industry when EuropeÆs economic production was reallocated to the war effort.
As the unofficial bank of the world, BritainÆs role as the financier of World War I eventually led to the depletion of its wealth, devaluation of its currency, and inflation. According to David French, the basic strategy of World War I was to lay siege to Germany for a number of years. France, Russia, and the rest of the ôentendreö would maintain military operations on both sides of Germany, since they were already there anyway, and Britain would supply them with food, clothing, arms, and other requirements. There would be less bloodshed if Germany was not directly invaded, and Britain certainly had the supply routes to make it happen. It was just a matter of waiting until the Germans starved.
Unfortunately this seriously underestimated the strength of the German military. Having abandoned ninetieth century rules of honor, the Germans brought in biological weapons (to use against the horses of the cavalries), toxic gas, and tanks (BBC, WWI). Thus the Russian and German troops fell much more quickly than anticipated. The allies demanded that Britain start sending people as well.
In addition, German U-boats sank many more supply ships than Britain had expected. This made it far more expensive to supply the enten...