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There was concern in Britain that other countries could surpass her in economic and military strength if the quality of the workforce was not improved.

One of the main threats to British business and production came from Germany, which was also highly industrialised:

• Germany was highly industrialised by 1906
• it was developing a navy that would rival Britain’s
• early forms of old age pensions and sickness insurance for workers had been introduced

The example of Bismarck's progressive social legislation in Germany, coupled with her economic and military strength, impressed ‘New Liberals’, Lloyd George and Winston Churchill. They believed that social reform may hold the key to curing Britain’s ailing workforce.