Although industrial predominance had been ceded to the United States and Germany before 1914, Britain had remained the world's premier trader, shipper and financier, adhering not only to free trade, but by maintaining a strong balance of payments position, having no difficulty in continuing to operate the gold standard. A great burst of overseas investment, together with rising food and raw material prices, had stimulated exports, increasing Britain's dependence on the primary producing countries. There had not been, however, at least from the 1880s, any notable increase in relative dependence on the formal empire, whether measured by exports, imports or investment.

A growing proportion of UK output had been exported before 1914, especially in the last decade and a half before the war. In effect, instead of meeting the challenge posed by the growing strength of its industrial competitors by developing newer lines of commodities, Britain had deflected it by finding new markets for the old products, and pumping up demand in those markets by the export of capital. By the 1920s this option was no longer available, and Britain paid the price for the earlier choice. Curiously enough, the growth record of the 1920s, as some economic historians have stressed, was quite respectable. It certainly marked an acceleration over the years 1899 to 1913. Between 1920 and 1929 industrial production grew at a rate of 2·8 per cent a year and industrial productivity by 3·8 per cent.