The British Empire: the End of the Sterling Area

The British Empire, the empire on which the sun never sets, created a period of unequaled economic success for the people of the United Kingdom. The domination of trade, technology, and financial success contributed to the economic supremacy of the United Kingdom and the sterling. Prior to the First World War the sterling stood alone as the international currency of business, which all major companies dealt in and many nations held as a reserve currency (......). After the peace of 1945 never again has the sterling held the same power it once wielded over the world. Many economic historians look to the agreement at Bretton Woods in 1942 between White and Keynes as the definitive moment the sterling lost its value. It was in that negotiation that Britain agreed to peg the sterling to the United States dollar. This seems the most logical explanation for the sterling’s decline as it restricted Britain's economic freedom over the next twenty-five years, but it does not explain why Britain’s economy faltered, so miserably compared to the rest of Europe. Which eventually caused the EEC to deny Britain entrance on grounds of economic instability twice. While Britain set their monetary and fiscal policy toward rebuilding the power of the empire and the sterling area, the post war western economic structure evolved past colonial needs by developing a cooperative network amongst industrialized nations. The pursuit of economic success through the imperial model could not match the success of the western world. The failure to set monetary and fiscal policy toward the change of economic reality occurred during a crucial world industrial boom that saw the United Kingdom fall from the undisputed gold standard of economic achievement to a second ...

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...ining of political and economic forces shaped the decisions within the British government. The unique position Britain created for itself during the Imperial Age became Britain’s biggest liability in the post war world. The British continued to build their economy in the way in, which it came to the forefront of world power in the previous few centuries, but the world had changed. Britain’s unwillingness to adapt eventually caused its decline from world power. Adaptability to changing market conditions has always given way for new players’ rise to power, while in the adverse, cannibalizes those that remain reluctant to change their winning formula. The nation that once prided itself on its ability to maintain the great empire became devoured by their commitments to their networks. The great British Empire became the United Kingdom, an island off the shore of Europe.