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That the British (UK, Commonwealth and Empire) should have fought on beyond 1940 is I think the accepted consensus - at least morally.

From a strict realpolitik point of view though could it have obtained a better outcome to the war by offering an armistice with Germany in late 1940 - after the Battle of Britain and abandonment of the USM? [1] Particularly if it had got wind of Hitler's intention to attack the USSR.

By December the British were repelling the Italians in Libya, and looked as if they could could reach Tripoli. The U-boats are causing problems in the Atlantic but it will be six-twelve months before their strength builds up. The Blitz is irritating but not seriously affecting morale or industrial production. The problem is running out of USD to buy raw materials, weapons and other goods from the US. Lend-Lease might be on the way but its very generous financial terms hide conditions that will mean the end of the Empire.

Conversely, Hitler has effectively abandoned [2] the Atlantic/Mediterranean strategy that would have put strangling the UK ahead of Operation Barbarossa. Resources used in both theatres are a diversion from the main goal - destroying the USSR. What price peace - or at least a cease-fire and Armistice?

So, is it in the short-tem interests of both parties to at least stop fighting and see what terms they can agree for an Armistice.? What could a cynical UK get to allow Hitler to attack the USSR with pretty much his full force? Obviously, given Perfidious Albion and all that, he'd keep at least the same proportion of total German strength watching the UK as he did watching the USSR in May 1940. Possibly more, Stalin could well have been more trustworthy than the average British PM.

Is this a plausible POD or just impossible to envisage?

[1] Clearly Churchill would have to have been replaced, from natural or unnatural causes.
[2] For instance U-boat production was boosted in july 1940 and reduced in priority only weeks later.
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