The British Empire had been financially depleted by the First World War, and the most valuable colonies bar India had become effectively independent, replaced by League of Nations mandates that were expensive to administer and provided little economic payback. Because of its immense debts and obligations, the Empire was forced to both reduce its military and to disperse it across the globe. Historian Paul Kennedy correctly called the challenges facing the Empire at this time "insoluble". Broadly speaking, the key territories of the Empire were the home nations, the Mediterranean territories, and the far east. It faced a serious enemy in all three territories, respectively, Germany, Italy, and Japan. Japan had become an increasingly probable enemy following the American imposed dissolution of the Anglo-British alliance. The British calculated that if a war in Europe took place, Japan was likely to take advantage and declare war if the British shifted resources back to Europe. Thus, a war in Europe was not considered to be an option. Chamberlain came to power well after appeasement had begun. The Japanese invasion of Manchuria, the Italian invasion of Ethiopia, and the German invasion of the Rhineland had all taken place without serious British reaction. According to Colville, Chamberlain took the view that a future war was likely, but that Britain needed time to rearm (and that rearming might prevent a war). As such, Chamberlain did everything within his power to delay a war while Britain armed.

Chamberlain had few cards to play. Retrospective diminutions of the German military ignore the fact that in 1937 the Luftwaffe was superior to the combined Franco-British air forces, and that in 1940 the Luftwaffe's supremacy secured German victory in the Battle of France. Furthermore Chamberlain himself was not a military commander, and was reliant upon the advice given to him by his general staff.