On May 10th 1940 Neville Chamberlain decides to remain in office as prime minister. Over the following weeks France and the Low Countries fall to Nazi troops. Chamberlain attempts to sign a negotiated peace with Germany with the Italian Government acting as mediator, however he is unable to secure guarantees for British control of Gibraltar and Malta. After the abortive evacuation at Dunkirk, where only 50,000 troops are evacuated, and the vast majority of British soldiers and equipment fall into German hands, many Britons prepare for invasion. Throughout June and July Hitler makes his invasion plans, and in the first two weeks in August the Luftwaffe destroys many RAF bases on the south coast. Nazi terror raids on Dover, Hastings, Portsmouth and other settlements on the south coast further damage British morale. On September 1st 1940 Chamberlain makes an offer of peace with Hitler, but by now Hitler has little interest in talks of peace. On September 3rd 1940, exactly one year after Britain declared war on Germany, German paratroopers begin landing on the south coast. Several hours later Nazi soldiers begin landing in Kent.
Within hours many of the political prominent flee the capital, Chamberlain and the cabinet relocate to the guildhall in Worcester, many foreigners rush to their embassies, and despite government pleas for the population to "keep calm and carry on" refugees pack the roads heading to the midlands and the north. British resistance was patchy and disorganised, and the British troops were ill equiped to fight the German panzers. On September 5th German forces reach the outskirts of London, Churchill resigns as Lord of the Admiralty and promises to lead a "peoples army" to defend london, however his attempts at resistance ultimately end in failiure. Churchill reluctantly flees to Edinburgh with the Royal Family the following day, and then on to Australia.
Chamberlain had been suffering from ill health for several weeks, and following the stress of invasion he deteriorated rapidly. On September 8th the second wave of the german invasion force lands on the south Devon coast and within a matter of hours General von Kleist's panzers arrive on the outskirts of Bristol. On September 10th Chamberlain resigns as prime minister, with Lord Halifax assuming the office as well as remaining foreign secretary.
The following day Halifax approaches the Spanish government, asking them to notify the German Embassy that the British government was ready for peace. It took until September 15th for a german response, and an armistice was declared whilst peace talks were held in London between Halifax and the german foreign minister von Ribbentropp. After several days of talks peace was declared. Southern Britain (from the Estuaries of the Severn and the Thames) was to be occupied by Germany, the British navy at Scapa Flow was to be given to the Kreigsmarine and the RAF was to be limited to 15 squadrons of aircraft and all spitfires and hurricanes were to be given to the german government. British territories in east Africa were to be ceded to Italy, whereas Singapore, Malaya and New Guinea were to be given to Japan. It was agreed a fourth round table conference was to be held in London beginning on November 12th 1940 (exactly 10 years after the first conference) but that Germany would send representatives to the conference. The terms were crippling but accepted.
At the conference India and Burma were granted Independence, but it did not have the support of Gandhi as he described the new government as "nothing less than replacing a white Viceroy with a Brown one". The newly released Subhas Chandras Bose was named as President, to be inaugurated in January 1942.
Throughout the Autumn and Winter of 1940 many fled unoccupied Britain for Ireland or America. Meanwhile Halifax's powers were slowly ebbed away to Ribbentropp, the newly installed Reichskommisar, von Brauschtisch the commander of the occupying forces and Dr Franz Six the commander of the ruthless Einsatztruppen based in most major cities in the occupied and unoccupied zones.
In November 1940 Chamberlain died of cancer.