Which of the following explains why the Great Depression spread to Britain
The Great Depression spread to Britain primarily due to two main factors:
1. Economic interconnectedness: Britain had a close trade relationship with the United States, which experienced a severe economic downturn and stock market crash in 1929. As a result, the collapse of the American economy had a ripple effect on British industries and businesses that were dependent on American trade. The decline in international trade reduced demand for British exports, leading to unemployment and a decline in economic activity in Britain.
2. Financial instability: The interwar period witnessed a highly interconnected global financial system, which made countries vulnerable to economic shocks. The banking crisis in the United States spread to the international financial markets, causing a loss of confidence in financial institutions. British banks, heavily exposed to global trade and investment, experienced significant losses which led to a credit crunch and restricted access to capital. This further weakened the British economy and contributed to the spread of the Great Depression to Britain.