The Soviets and US show no signs of entering the war in 1940. The embargo will not work with the Soviets supplying the Germans.
So the same situation as during significant stretches of the Napoleonic Wars? If the Brits didn't throw in the towel then I see no reason this will impact their thinking in 1940.
With a semi-permanent German occupation of France and the Netherlands, Germany will have the industrial capacity to outproduce Britain in planes and ships if Britain pursues the war.
No they don't. The Brits outproduced the Germans IOTL by nearly 40,000 aircraft, and the German collapse in aircraft production in 1945 is more than counterbalanced by the fact that the German production totals were biased far more towards single-engine fighters than the Brits, which of course leads to more overall aircraft produced because single-engine fighters are cheaper and less stressful on scarce resources like engine production than multi-engine bombers.
This is with French and Dutch industry available to help out the Germans. Neither were big aircraft producers - in the one year they were in the war and unoccupied they produced about 4300 aircraft combined. Even assuming they kept producing at those levels that's another 16,000 aircraft or so, not enough to close the gap in British and German aircraft production. Of course, that assumption doesn't hold water because the Germans were not in the business of letting either country's aviation industry have the resources to run full-tilt and actual Franco-Dutch production under German occupation amounted to a whopping 880 aircraft.
en.wikipedia.org
As for ships, please. Not only was Plan Z a pipe dream, the Brits had the means and motivation to outbuild it sooner and with a more balanced force structure. Given the aforementioned inability for the Germans to leverage French aircraft production, what makes you think adding Dutch and French construction facilities is going to actually help the Germans?
And don't try to say the Germans will reduce the size of their army in this scenario, they're still going to want to go after the Soviet Union.
Germany lost its colonies in WW1 and will be invested in peace with Britain if Germany regains colonies.
Why? The Nazis showed no interest in gaining extra-European colonies.
Even during the Napoleonic wars Britain always had a continental ally fighting on their behalf.
No they didn't. There was a solid year in 1803 and 1804 between Britain declaring war on France and then signing an alliance with Sweden. Then another year-long gap in 1807 and 1808 between the collapse of the Fourth Coalition and the start of the Peninsular War.
The only reasonable course if there is no continental ally to fight with is to rearm, encourage a confrontation between the Germans and Soviets and see if Germany slips up.
Yeah, which they can do
without signing such a one-sided armistice.