The American Revolution greatly impacted Britain during and after the war by straining the British economy while preparing the British military for future conflicts. In the long term, it led to Britain gaining a valuable ally with similar values that continues to be very important today.
American independence signified the creation of a new nation-state and a new player on the world political/economic scene. With its history of European ties, an independent America was sure to become a key political and economic player in European affairs. As the United States grew in the following centuries, its importance to Europe also grew. Today, the United States is one of Europe’s greatest economic and political allies.
Two months of hard bargaining resulted in a preliminary articles of peace in which the British accepted American independence and boundaries--a bitter pill to George III--resolved the difficult issues of fishing rights on the Newfoundland banks and prewar debts owed British creditors, promised restitution of property lost during the war by Americans loyal to the British cause, and provided for the evacuation of British forces from the thirteen states. The preliminary articles signed in Paris on November 30, 1782, were only effective when a similar treaty was signed by Britain and France, which French Foreign Minister Vergennes quickly negotiated. France signed preliminary articles of peace with Great Britain on January 20, 1783, which were followed by a formal peace of Paris signed on September 3, 1783.
The British were afraid a full blown revolution would emerge in Ireland, and acted conciliatory. Britain thus relaxed its trade restrictions on Ireland, to allow them to trade with British colonies and freely export wool, and reformed the government by allowing non-Anglicans to hold public offices. They repealed the Irish Declaratory Act while granting full legislative independence. The result was an Ireland which remained part of the British Empire.
By declaring independence, America demonstrated that it was possible to overthrow “old regimes”. This was the first time a colony had rebelled and successfully asserted its rights to self-government and nationhood. This inspired many European nations and colonies to revolt.
The American Revolution was Britain's longest colonial conflict of the modern era and a struggle that set new standards for British levels of military service and taxation. Although the North American theater is the one with which most people today are familiar, the war affected virtually every part of the empire, with fighting in India, the Mediterranean, West Africa, and the Caribbean. Following the intervention of France in 1778, even Britain had to prepare for a Bourbon invasion, while mounting opposition to the war in America brought both Ireland and England to the brink of civil war. Thanks to a series of timely victories in India and the Caribbean, the government managed to avoid the full catastrophe that many people had forecast. Even so, the loss of the thirteen colonies was a humbling experience, as potentially devastating to Britain's interests abroad as it was disruptive of political life at home.
After the war, the British Army and Navy agreed to leave all American territories. England had controlled trade in the colonies. They had forced the colonists to trade only with England and buy only English goods. They had placed heavy taxes on products from other countries. The United States was now able to trade freely with other countries of the world.
On the other hand, wartime industry such as the naval suppliers or the elements of the textile industry which made uniforms experienced a boost, and unemployment fell as Britain struggled to find enough men for the army, a situation which would cause them to hire German soldiers. British ‘privateers’ experienced as much success preying on enemy merchant ships as almost any of their opponents. The effects on trade were also short term, as British trade with the new USA rose to the same levels as trade with them in colonial form by 1785, and by 1792 trade between Britain and Europe had doubled. Additionally, while Britain gained an even larger national debt, they were in a position to live with it and there were no financially motivated rebellions like those of France.
Britain spent a huge amount of money fighting the Revolutionary War, increasing national debt hugely and creating a yearly interest of nearly ten million pounds. Taxes had to be raised as a result. The trade which Britain relied on for wealth was severely interrupted, with imports and exports experiencing large drops and the recession which followed caused stock and land prices to plummet. Trade was also affected by naval attacks from Britain’s enemies, and thousands of merchant ships were captured.
British victory, however, came with a heavy price tag. The war proved to be very costly and, by the end of the fighting, massive war debts led the British government to the verge of bankruptcy.3 Additionally, the rapid expansion of the British Navy came at the cost of the British merchant fleet. In the name of the war effort, the British government oftentimes forcibly converted British merchant vessels into war ships. As a result, Britain emerged from the Seven Years’ War without the commercial trading capacity that it once had.4 The British now also had thousands of new subjects from the newly acquired French and Spanish territories to appease. In such an effort, King George III issued the Quebec Act in 1774. The Act intended to sway the allegiance of the French-speaking Canadians towards the British. In practice, though, the Quebec Act riled anti-British sentiment amongst the American colonists who felt the Act was yet another example of British encroachment on American freedoms of religion and self-rule.
“The Seven Years’ War was in its origin not an European war at all; it was a war between England and France on Colonial questions with which the rest of Europe had nothing to do” - Arthur Ropes, late nineteenth century British historian