The period from the end of the ‘Great War’ to World War II saw immense change and upheaval in the British economy and in British banking. The post-war economic boom quickly ended in 1921 and was followed by years of depression and the painful readjustment of the staple industries. Britain returned to the gold standard in 1925 and came off it again in 1931 – a year of international financial crisis. Unemployment soared and overall economic recovery was not seen until the mid-1930s. Depression was therefore a key feature for most of the inter-war period and it profoundly affected Britain at all levels, ‘provoking a further revaluation of … political, social and economic beliefs and of the economic institutions they sustained’. The Depression increased political consciousness and inspired the growth of the Labour Party. There was dissatisfaction with established classical economic theories and of market mechanisms, most vividly displayed by the spread of the theories of Keynes. The period was one in which disillusionment with Britain's traditional principles of competition, laissez-faire and limited state guidance resulted in rising support for an increase in state intervention in the economy.

The banks operating in this economic environment also underwent adjustments. The year 1918 saw the culmination of the amalgamation movement whereby the country's banking sector became very concentrated, mainly in the form of the ‘Big Five’ clearing banks.