This paper centers on the British economy before the outbreak of the war, describing the process of Britain’s economic policy from mercantilism at the beginning of the 18th century, which was promoted by classical economic theories such as those of Adam Smith and shifted to free trade through the repeal of the Grain Act and tariff reforms in the 1840s under the background of the First Industrial Revolution. It also introduces that after the completion of the Industrial Revolution, Britain’s population growth provided labor and the rise of five major industrial sectors, such as textiles and iron and steel, to become the “factory of the world”. Due to overcapacity and demand for raw materials, Britain relied on overseas markets and expanded its layout through colonial conquests, with India and the Near East becoming important economic regions that supported its economic development.