One of the early reasons for the adoption of appeasement was economic difficulties.

Impact of the Great War

• In present day terms, the Great War had cost Britain around $35 billion.
• As a result, the Government was looking to cut back on military spending.
• In 1919 the Treasury introduced the Ten Year Rule - they believed there wouldn't be another major threat to the British Empire for at least 10 years.
• As a result, the armed forces were cut back dramatically.

Economic depression

• The Wall Street Crash of 1929 and the Great Depression also put off military spending.
• Unemployment was rising and many businesses closed.
• With three million people unemployed, the government faced greater need for social welfare spending.
• Chamberlain wanted to increase the amount of money used for social welfare, so was reluctant to increase military spending.

Cost of rearmament

• Spending on the armed forces would affect attempts to recover from the Depression.
• It would divert spending away from social welfare
• It would divert spending away from consumer goods such as cars or radios. These were very profitable and helped the economy to grow.

European recovery

• Europe's economy was still recovering from the Great War and the effects of the Wall Street Crash.
• It was thought that a strong, prosperous Germany could help revitalise the economy of these nations.