As the lynchpin of the gold standard and the largest foreign investor of the nineteenth century, Britain had major offshore liabilities in the form of foreign holdings of sterling-denominated assets. Returning to gold at a lower than pre-war parity would quite literally devalue those assets. This would have led to a serious run on the pound as investors tried to dump sterling en masse, just as the gold standard intended, which would have resulted in massive losses for the City. So when Churchill put Britain back on gold in 1925, the domestic economy was quite deliberately going to be squeezed so that the value of sterling and, not coincidentally, the profits of finance, would be maintained.

Mark Blyth, Austerity, loc. 513