Peace With Honour - 1921
After the defeat of France the United Kingdom's war with Germany dragged on inconclusively for two years. In 1921 the stalemate was finally broken when Lloyd-George agreed to General Ludendorf's proposal for a "Peace with Honour". Under the terms of this treaty it was agreed that Britain would acknowledge Germany's gains from the war, whilst Germany would respect the Imperial possessions of the remaining Entente powers of Britain, Japan and Portugal. However, while Britain's overseas territories remained largely ordered and intact, the faith and support of the people in the Home Islands did not.
In 1925, disaster struck: a minor labour dispute in the coalfields of South Wales quickly escalated after troops were sent in to restore order. Following the French example, a General Strike was called by the TUC to cripple the economy. When the government sent orders for the military to quell the unrest, many troops deserted to the side of the strikers, which was accompanied by a major naval mutiny. After six weeks of rioting, looting, and pamphleteering on a massive scale, the Royal Family was evacuated to Canada, followed by most of the country's leading politicians and large property owners.
Following the fall of the British government, a provisional government of revolutionary groups dissolved both Houses of Parliament, and declared that political authority in the "Union of Britain" would pass to a new Congress of Trade Unions.The fall of Britain itself lead to a massive landgrab by many of its longtime enemies. Gibraltar finally fell into Spanish hands once again, while Argentina quickly seized the Falklands, Egypt gained sole authority over the Sudan and the Ottoman Empire regained control over Cyprus. The German Empire managed to secure most of the British African Empire as well as the strategic colonies of Malta, Suez, Aden, Ceylon, the Strait Colonies, Brunei and Sarawak.
Australia and New Zealand seized the British part of New Guinea and Fiji. Later in the year both nations would form the Australasian Confederation for mutual protection.
India, once the pearl in the British crown breaks down into three new states. The Princes of Kashmir and the Punjab unite with the other remnants of the Raj to create British friendly Delhi while a revolt in Bengal leads to the establishment of a syndicalist state there. The Princes of the South form their own, independent Princely Federation. Burma becomes an independent kingdom once again.
The Royal Navies Caribbean squadron secured the British colonies in the region. These colonies, together with the former French colonies in the region would form the Caribbean Federation.
Following the revolution, 1926 saw the formative Congresses of Socialist Britain, with advocates of various positions coming together to hammer out the framework of the new state. What resulted was a compromise between the factions that enshrined the principals of decentralization, co-operativism, and isolationism. This resulted in the establishment of locally elected councils as the main organ of government (supervised by the national direction of the CTU), a dominant public sector, and a diplomatic stance that emphasized self-defense and national self-reliance above all else.
In 1932 Hertzog wins the elections and declares South Africa to be a republic, South Africa leaves the Entente.