What Was the Economic Impact of the First World War on the British Empire?

• BRITAIN:
  • War was extremely exhausting for Britain.
    • Estimated to have cost around £35 million, over 13 times as much as Boer War, which was regarded at that time as being enormously expensive war.
    • Over $4 billion had to be borrowed from US.
    • Much of Britain’s capital investment overseas had been wiped.
    • Pound sterling had to be removed from gold standard for duration, because gold reserves ran so low.
    • Lending money was difficult.
  • War effort had severe consequences for most important export industries.
    • Production for war prioritised over making goods for export to traditional overseas markets and thus Britain’s competitors able to win markets traditionally dominated by British exports. Not all these overseas markets won back after First World War.
    • Textiles, shipbuilding, coal, iron and steel à created income to pay for running and defending Empire though experienced great difficulties between wars as they faced new overseas competition, i.e. Japanese textiles.
  • INDIA:
    • Contributed £146 million to war effort and country experienced inflation and shortages during war.
    • Imports from Britain began to fall after 1914, which at the time was 2/3 of total import, because of growing strength of foreign competitors. Indian manufacturers began to develop own market and also maintained British control.
      • Rose from 11% in 1917 to 25% in 1931.
    • CANADA:
      • Benefitted from war, emerging as industrial power as British manufacturers lost ground.
      • Began trading more with America.
    • AUSTRALIA AND NEW ZEALAND:

Exporters of food and relied heavily on British markets à hit hard by disruption of trade caused by war.