<P> In Britain, funding the war had a severe economic cost . From being the world's largest overseas investor, it became one of its biggest debtors with interest payments forming around 40% of all government spending . Inflation more than doubled between 1914 and its peak in 1920, while the value of the Pound Sterling (consumer expenditure) fell by 61.2% . Reparations in the form of free German coal depressed local industry, precipitating the 1926 General Strike . </P> <P> British private investments abroad were sold, raising £ 550 million . However, £ 250 million in new investment also took place during the war . The net financial loss was therefore approximately £ 300 million; less than two years investment compared to the pre-war average rate and more than replaced by 1928 . Material loss was "slight": the most significant being 40% of the British merchant fleet sunk by German U-boats . Most of this was replaced in 1918 and all immediately after the war . The military historian Correlli Barnett has argued that "in objective truth the Great War in no way inflicted crippling economic damage on Britain" but that the war "crippled the British psychologically but in no other way". </P> <P> Less concrete changes include the growing assertiveness of Commonwealth nations . Battles such as Gallipoli for Australia and New Zealand, and Vimy Ridge for Canada led to increased national pride and a greater reluctance to remain subordinate to Britain, leading to the growth of diplomatic autonomy in the 1920s . These battles were often decorated in propaganda in these nations as symbolic of their power during the war . Colonies such as the British Raj (India) and Nigeria also became increasingly assertive because of their participation in the war . The populations in these countries became increasingly aware of their own power and Britain's fragility . </P> <P> In Ireland, the delay in finding a resolution to the home rule issue, partly caused by the war, as well as the 1916 Easter Rising and a failed attempt to introduce conscription in Ireland, increased support for separatist radicals . This led indirectly to the outbreak of the Irish War of Independence in 1919 . The creation of the Irish Free State that followed this conflict in effect represented a territorial loss for Britain that was all but equal to the loss sustained by Germany, (and furthermore, compared to Germany, a much greater loss in terms of its ratio to the country's prewar territory). Despite this, the Irish Free State remained a dominion within the British Empire . </P>

Territorial changes after world war 1 led to the creation of new countries including