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Chapter 3.3 - Dancing in Anglia

Although Germany no longer needed to fear the Australian carrier Vanguard as it returned to the Mediterranean, British Naval presence was growing rapidly and the Home Fleet was less than a week away from English shores. The Kriegsmarine decided to use their last week to step up shipment of troops and supplies to Britain while they still had a chance of holding the seas. Rather than sit and let this happen, the Royal Navy decided to take the risk of exposing what ships she did have on station to the Luftwaffe and ordered them to sortie against the German Navy.

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Pictured above, the battlecruiser HMS Hood closes in on the German pocket battleship KMS Admiral Graf Spee and fires a lethal salvo from her 15" guns.

The British still had one ship in the area capable of contending with the Germans, and it was a powerful ship at that. Escorted by the cruiser HMS Suffolk and several destroyers, the fast and powerful HMS Hood departed from port in Newcastle and struck out against the German Navy operating near Dover. Although her original task was to hunt and disrupt German shipping, this would not come easily as they encountered heavy escorts including the pocket battleship KMS Admiral Graf Spee 26 miles east of Dover. Masked by poor weather at first, the Graf Spee and her escorts stumbled across one another at a range of just 3km, well within reach of each other's guns. What erupted was a fierce battle as the two sides pounded each other from a relatively close range. Graf Spee took two hits and was left a burning wreck, barely afloat, while two German destroyers were sunk by HMS Suffolk. The victory was not without a price, however - the Luftwaffe arrived just two hours after the battle's beginning and the British ships were subjected to heavy air assault. HMS Hood was hit in her stern and forced to retreat to port while HMS Suffolk took several hits from the light cruiser KMS Köln before a bomb penetrated one of her main gun's magazines. The ammunition storage detonated and Suffolk was nearly ripped in half by the force of the loss. She sank within just minutes of the incident. The engagement was, for the most part, an even match.

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Australian forces press harder into Northeast Hampshire while Germans attempt to regain their positions around Southend in spite of British assaults pushing them back.

On land, the situation was currently more in favour of the British. Although Norwich had fallen to the Germans, who were using the important RAF base to their advantage, Jerry had been driven out of Southend. The Germans were making multiple attempts to retake the town before British troops could fully cut off the coastal roads. but it came at a cost. What had started as a suspicion was now becoming well known to the British: German troops were running out of supplies. The stress of so many troops was too much for the limited port facilities at Dover and Hitler's airlifting capability was not yet sufficient to feed the entire Army's march. London's arsenals held plenty of supplies if the Germans could simply breach the City, but all attempts to take her so far had failed.

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Guderian received more bad news on the 29th of January - Aldershot had fallen into the hands of the Australian 1st Cavalry and his panzers were completely cut off from the rest of the German beachhead. Something needed to be done and soon. The loss of tanks and men had been painful enough, but now two entire panzer divisions were surrounded by the elite ANZAC expeditionaries who seemed more than prepared to hit the Germans as hard as possible. At last, Hitler responded and approved the shifting of troops away from London in order to try and save the offensive.

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Two entire panzer divisions were surrounded at Slough, west of London. Although they held England's crucial rocket testing facilities, that did little for their dwindling supplies of fuel and ammunition.


As New Zealand infantrymen advanced on the trapped German tanks, RAAF bombers dove from the sky, knocking out tanks and men alike with deadly close air support. Major General Herbert Geitner was fighting hard to try and save his tanks from the nearly impossible situation around Slough. Unsurprisingly, the British showed no mercy...

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The German Panzer spearhead - formerly surrounded by Yugoslavian and Greek troops - was now a growing salient in the Balkan lines.

In Eastern Europe, the Balkan Alliance was faltering in the face of increasing German pressure. The spearhead had been rescued by German infantry and slowly enlarged into a growing salient. In the north, forces were pushed back even further and it seemed that Yugoslavia was in no shape to hold back even one arm of the German force. If Hitler had not insisted on invading London then it is likely the slavs would have been forced into surrender before Christmas.

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German forces march to the harbours of Amsterdam, preparing for overseas deployment.

The Germans were not prepared to give up Britain just yet. Despite the already apparent shortages of supply, Hitler insisted on the dispatch of new formations to Britain and began to divert tens of thousands of newly trained men to occupied Holland, where they would depart from the ports at Amsterdam, Den Haag, Rotterdam and Dordrecht. No mercy was to be shown to the British in this invasion.

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Pressure increases on the German Pocket. New Zealand infantry and the Australian 1st Cavalry are joined by Danish irregulars and British motorized infantry in the assault.

Pressure on the German pocket around Slough increased and the tanks were forced to pull back to an increasingly tighter perimeter. The Germans were under intense pressure and radioed for constant help. Although the Luftwaffe did its best to maintain air superiority, this was a difficult challenge when they faced not just the RAF but also the RAAF, who maintained the home advantage and could strike with their bombers from relative safety and short range.

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Although the Kiwis had operational parity in terms of numbers, the Germans had sizeable numbers of armoured units while the New Zealand infantry carried only the most rudimentary of anti-tank weapons. Given that they were on the assault this naturally provided for some difficulties, but the ANZAC army refused to give in and continued the pressure.

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German Armour storms the City of Cambridge and its world-famous university as well as further encircling the City of London.

Not far northeast of London, Cambridge fell into German hands. The news spread like wildfire that German troops were occupying the world-famous Cambridge University. This disaster was shameful to the British, whose sense of invincibility was being irrevocably shaken up by the Hun's bloody advances. Prime Minister Churchill declared that he would retake Cambridge at any cost, but when the night reached its end and the New Year of 1941 dawned, a counterattack on the city had been completely ineffective. Southend, too, fell into German hands and if the Germans could gain fresh supplies, it seemed little would stop them from taking London.

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Princess Marie-José, officially the Queen of Italy, would make an important stand for the Allied Cause more out of personal fear than out of idealism.

The New Year, however, brought shocking news. News broke across the world that King Leopold III of Belgium, his wife and all his children had perished during a surprise German air raid on Liverpool. The throne of Belgium was empty and with the nation occupied, there was no easy path to succession. Just two days later, even more shocking news was heard. Somehow, unbeknownst to the Italians, Marie José, the sister of Leopold III and husband of the King of Italy, was reported to have fled the peninsula from Naples into Australian-occupied Sicily along with her three children. How she accomplished this miracle during times of war and in the high-security fascist state of Mussolini were unclear, but she did make it clear that Il Duce's men aimed to see her imprisoned or perhaps even dead; the reasons and implications of this would not become elaborated on for nearly fifteen years, but nonetheless the Australians agreed for the time being to grant her asylum. The British approved of this move - it was hoped that a defector of such high status and repute would help boost Allied morale and hurt that of the Axis. It was also hoped that Marie-José could be offered as a suitable heir to the Belgian Throne, but this was not something that Hitler would allow to pass with ease. When news of Leopold's death reached the continent, Belgian citizenry were incensed and it soon became clear that a popular uprising was in the works in Belgium.

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Allied Reserves join the fighting around Slough, including Danish irregulars and a column of British motorized infantry.

Around Slough, Allied Forces continued to push back the Germans as pressure increased. The enemy tanks were soon defending just the town of Slough itself and it seemed nothing could stop the British from breaking through - but the Germans were not done yet. The increased presence of Luftwaffe aircraft over Slough led to many fierce clashes in the sky, but they had succeeded in airlifting supplies to the besieged forces and effectively shut down the RAAF's bombing campaigns. For the first time in two weeks, the German panzers were able to move in the open of daytime without fear of attack and they would exploit this as much as possible...

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Australian troops defending the Strait of Messina fall back to Palermo. Soon the Australians will evacuate Sicily entirely and begin shipping five divisions of infantry to England via Sardinia and Gibraltar.

Under the careful watch of HMAS Vanguard and the powerful Royal Navy, Australian operations to withdraw from Sicily were going smoothly. Field Marshal Sir Cyril Bingham-White was infuriated at having to abandon his Italian holdings yet again, fearing that retaking the islands would not be such an easy task in the future. Nonetheless, Britain needed as many men and guns on the front as possible and the Australian divisions included hundreds of heavy guns that the British Army currently lacked. The extra firepower would go a long way to stopping the German Armoured push from succeeding at its goals.

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British Infantry entrenched at the City of Brighton and its satellite, Hove. They know German counterattacks are coming, but are not well-equipped to deal with it.

Britain shed plenty of blood to retake Sussex from the Wehrmacht and the British infantry dug in heavily, expecting counterattacks out of German-held Kent. The British were right to expect this, but wrong to think that a few trenches might save them. Allied intelligence had underestimated the number of new men and vehicles Hitler could bring to the front and on the morning of January 5th, an entire division of Panzers crashed west out of Dover and into the British lines at Brighton. Resistance would not last long and within a day the British were falling back across the entire front, fighting a carefully planned withdrawal.

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On January 9th, the British forces at Portsmouth would come under yet another attack. They could not hold against the rapidly advancing Blitzkrieg.

Now things were becoming desperate for the Allies. Guderian was commiting deployed forces and prioritizing every scrap of arms and fuel he could muster to take Portsmouth. This defied British expectations, which anticipated a German counterattack on Aldershot to try and free the trapped armour. Now Portsmouth was in danger of falling and Australia faced a choice: save Portsmouth or finish off the German armour.

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Against the better judgment of local commander Major General Robertson, the Australian 1st Cavalry would be recalled to strike against Brighton and disrupt the German advance on Portsmouth.

Although Australian forces on the ground wanted to finish Geitner's tanks, New Zealand infantry were confident of their ability to defeat the panzers alone and Allied Command ordered Robertson to drive his men due south and cut off the German coastal advance by flanking in behind their lines. The move was a complete success and German panzers were forced to stop their assault in order to turn and deal with the surprise attack. Despite a lack of many real armoured fighting vehicles, the Australians dealt heavy damage to the German column through excellent positioning and use of infantry anti-tank weapons. Portsmouth was spared for the moment, but at what cost...

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New Zealand's own anti-tank capabilities were far worse than generals predicted and the assault on Slough rapidly deteroriated. By January 12th the Kiwi Infantry had been forced to call off the bloody assault completely.

New Zealand's attacks from the west had been crushed by a powerful counterattack by Geitner from Slough and the British and Danes were pushed back across the Thames by the evening. Geitner's heroic defence of the town compounded by his willingness to lead, organize and fight from the front made him a minor hero in the eyes of Guderian and Hitler. Now that his tanks had a moment of respite and the skies were comparatively clear of Allied bombers, he ordered his troops to break the encirclement by storming southeast at all due speed. Now it was the Australians who were outflanked as Geitner's panzers arrived from behind their front and Robertson could do little to resist. He began to fall back rather than allow more of his men to die needlessly in this bloody battle. When news reached Hitler that Geitner had personally led his own tank in the spearhead to retake Aldershot from the Australians and for his unflinching bravery and leadership under heavy enemy fire, the Führer awarded the German general the Iron Cross for his courageous leadership in battle. He would be one of the very few generals in German history to win the award, but it would indicate how important Hitler believed the panzer breakout to be. Portsmouth was now wide open to attack as retreating and broken Australians were making their way back to Reading, unable to easily reach the roads to Portsmouth.

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Disaster struck. News of German landings near the undefended ports of Grimsby and Hull spread like wildfire across British lines. Britain's navy had missed one last landing of troops by the Germans - would this be their last mistake?

The focus of the British Navy on a southern attack blinded them to the presence of a German force closing in on the east coast. Despite the presence of HMS Hood's battlegroup at Newcastle, scouting patrols failed to pick up the landings until it was too late. German forces landed on Britain's mid-eastern shores on the morning of the 16th. British troops were completely inadequately positioned to halt the attack, with just a single brigade (mostly anti-aircraft) with an attached command battalion positioned in Scunthorpe expected to stop untold thousands of German troops. It was an impossible demand and British divisions would have to be redistributed to the industrial heartland as soon as possible.

December 28th-January 16th
Royal Australian Army:
4,471 Soldiers killed in action
Royal Australian Air Force:
22x Fairey Swordfish Dive Bombers lost
14x Hawker Hurricane Fighters lost
7x Supermarine Spitfire Fighters lost
Royal Australian Navy:
2x Merchant Ships sunk
German Werhmacht:
3,791 Soldiers killed in action
46x Tanks lost
5x Tank Destroyers lost
German Luftwaffe:
15x Messerschmitt Bf-109 Fighters lost
German Kriegsmarine:
1x Merchant Ship sunk
Royal Thai Army:
724 Soldiers killed in action​
 
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The London itself is almost completely surrounded - if the Germans take back Aldershot then Luton, the last road to the capital, will not be far behind. Furthermore, you won't be able to destroy two trapped Panzer Divisions in Slough Pocket. With landing of the fresh forces in Grimsby, from where the Axis can launch an offensive without any retribution, cutting off England itself in a half and encircling the Allied armies it's safe to say that Britain's Final Hour has arrived.
 
oh whoops, gripping stuff. Its so frustrating when you pocket German armour and can't finish them off for lack of decent HA.

but the landing at Grimsby is probably fatal to holding southern England, and if the supply stocks at London fall, then the Germans will have no residual supply issues for quite a while
 
oh whoops, gripping stuff. Its so frustrating when you pocket German armour and can't finish them off for lack of decent HA.
Yes, but AT wouldn't have helped that much. Infantry divs would have higher HA, but lower SA and even though they would be able to deal slightly higher damage (depending on softness), there was no way to win that battle with a 1:1 ratio in troops ON ATTACK. Later it got better, but then other problems appeared - most notably the attack on Portsmouth.

The action is intense. I don't know whether the UK will prevail, though.
 
The London itself is almost completely surrounded - if the Germans take back Aldershot then Luton, the last road to the capital, will not be far behind. Furthermore, you won't be able to destroy two trapped Panzer Divisions in Slough Pocket. With landing of the fresh forces in Grimsby, from where the Axis can launch an offensive without any retribution, cutting off England itself in a half and encircling the Allied armies it's safe to say that Britain's Final Hour has arrived.

I don't think I can realistically hold Aldershot without British help - just look at those numbers! That said, Luton won't fall easily so London isn't completely surrounded, but I'm more worried about the Germans taking Portsmouth as it'll double their supply throughput. I'm quite sure that they're suffering serious supply issues right now and with Portsmouth that's all going to change. This would likely give them the freedom to strike London and if that falls, they won't have to worry about supplies ever again. That landing at Grimsby is a complete disaster though, but at least they're all in one stack for now and not spread along every port on the east coast.

oh whoops, gripping stuff. Its so frustrating when you pocket German armour and can't finish them off for lack of decent HA.

but the landing at Grimsby is probably fatal to holding southern England, and if the supply stocks at London fall, then the Germans will have no residual supply issues for quite a while

A little more HA might have helped but honestly having the Australian artillery with its extremely high toughness values would have gotten me further than HA, I think. Australian divisions are just considerably nastier on the offense than the NZ ones, no offense to the Kiwis - it's a simple matter of hardware. I think England's fate still comes down to London. If it falls, I probably can only buy time, not a victory.

Yes, but AT wouldn't have helped that much. Infantry divs would have higher HA, but lower SA and even though they would be able to deal slightly higher damage (depending on softness), there was no way to win that battle with a 1:1 ratio in troops ON ATTACK. Later it got better, but then other problems appeared - most notably the attack on Portsmouth.

The action is intense. I don't know whether the UK will prevail, though.

All I could do with 1:1 was buy time. I'm still debating to myself whether or not I should have continued pressuring the pocket and taken two divisions out of the fight now that Portsmouth will likely fall anyway. It's a crummy position any way you look at it.

Hopefully you can shift those infantry divisions from Sicilia quick enough to save the incompetent Brits.

That's all that'll save Britain now, for sure. Nearly 60,000 Australians from Italy would make a huge contribution to the front lines, but it'll take me two trips to bring them all...
 
Saithis said:
I don't think I can realistically hold Aldershot without British help - just look at those numbers! That said, Luton won't fall easily so London isn't completely surrounded, but I'm more worried about the Germans taking Portsmouth as it'll double their supply throughput.
It removes your troops from the defense of the London itself though - you can't risk your army to be trapped there and with the fall of Luton that possibility exists, so you're restricted to cover the surrounding areas, including northern front. If London falls due to lack of direct support then the Britian won't be far behind as your own troops will suffer from lack of supply. The overall situation around the capital is bad no matter how to look at it. Your only hope is that the Germans won't risk direct attack on the city without reinforcements from Grisby. It's a small window of time where you can stop them by either redeploying your units near London or sending troops from Sicily to fill the hole in the Trent Line on the river. (I assume it's Trent as there are little to no indicators on most maps...)
 
worst case scenario: you try to fall back to Northern Ireland. hold Dublin at all costs. just a thought, as there is only 1 direct connection as far as I know (easy to defend with bombers and navy, perhaps?)
 
Another landing? Stupid sealions!

You need to launch Operation Orca to stop these shenanigans. Though at this point you might as well be launching operation Free Winston!
 
Great stuff. Looked like you were about to turn the tide there until the fresh crop of Jerries arrived.
 
Christ almighty, it looks like old blighty is done unless large amounts of Commonwealth troops arrive and ricky tick!

In this case, I think England is lost, best to make it as costly as can be on the Germans and maybe set up a new line in Scotland/Northern Ireland or a double front across the midlands!
 
Another German landing!! That really is amazing... and of course disastrous!

Hats off to Geitner! It looks like he's not only saved his panzers but made the defence of Portsmouth untenable. That alone is bad enough since it will allow so much more supply to flow to the German forces.

Now that the Germans have landed unopposed at Grimsby and are next door to Hull, I would say that saving the north England and Scotland is no longer a possibility unless your reinforcements land there. In the south, your divisions are inland and you don't have the transports to move them, so maybe you should still focus on defending the south and London and concentrate all your forces there alongside the British.

A really tough situation. If you can hold the Germans and keep this campaign going you might still manage to disrupt their plans for 1941...
 
It removes your troops from the defense of the London itself though - you can't risk your army to be trapped there and with the fall of Luton that possibility exists, so you're restricted to cover the surrounding areas, including northern front. If London falls due to lack of direct support then the Britian won't be far behind as your own troops will suffer from lack of supply. The overall situation around the capital is bad no matter how to look at it. Your only hope is that the Germans won't risk direct attack on the city without reinforcements from Grisby. It's a small window of time where you can stop them by either redeploying your units near London or sending troops from Sicily to fill the hole in the Trent Line on the river. (I assume it's Trent as there are little to no indicators on most maps...)

It certainly increases pressure on London although I'd be more concerned about units north of the Thames than south. If I can use this as an opportunity to take Slough back then it might be tit for tat but we'll have to see what the AI decides to do first.

worst case scenario: you try to fall back to Northern Ireland. hold Dublin at all costs. just a thought, as there is only 1 direct connection as far as I know (easy to defend with bombers and navy, perhaps?)

If I really can't hold I'll withdraw to Northern Ireland and then consider whether or not to fall back further, which I probably will. Sitting stacks of troops in Ireland won't do much to win me the war, even if it was easily defendable (it puts me at the mercy of repeated Luftwaffe bombings, though.)

Another landing? Stupid sealions!

You need to launch Operation Orca to stop these shenanigans. Though at this point you might as well be launching operation Free Winston!

You know you love the cute little sealions. That said you now force me to draw a picture of a killer whale with a top hat, monocle and cigar.

Great stuff. Looked like you were about to turn the tide there until the fresh crop of Jerries arrived.

I was getting close, but I don't think much can stop Jerry now. It's more a question of how many casualties can I inflict before I'm kicked off the island.

Christ almighty, it looks like old blighty is done unless large amounts of Commonwealth troops arrive and ricky tick!

In this case, I think England is lost, best to make it as costly as can be on the Germans and maybe set up a new line in Scotland/Northern Ireland or a double front across the midlands!

Pish posh, old bean, show them a bit of the old stiff upper lip why don't you!

You're probably right though. Depending on how the terrain in Scotland lines up and how fast they advance, it might be possible to hold there if I had control of every unit on the field, but the AI's questionable defensive strategy may rob me of that option.

Another German landing!! That really is amazing... and of course disastrous!

Hats off to Geitner! It looks like he's not only saved his panzers but made the defence of Portsmouth untenable. That alone is bad enough since it will allow so much more supply to flow to the German forces.

Now that the Germans have landed unopposed at Grimsby and are next door to Hull, I would say that saving the north England and Scotland is no longer a possibility unless your reinforcements land there. In the south, your divisions are inland and you don't have the transports to move them, so maybe you should still focus on defending the south and London and concentrate all your forces there alongside the British.

A really tough situation. If you can hold the Germans and keep this campaign going you might still manage to disrupt their plans for 1941...

The landing is pretty disastrous for Britain, not the least because of the sheer number of troops involved. Times like this I really wish the Naval AI was better at patrolling and maintaining strict presence within territories. Credit where credit is due though, Geitner gets to be Germany's hero in this timeline and that action around Hampshire may have saved the German war effort in Britain.

What worries me about the North is less that Hull is vulnerable and more that there's basically no defenders in the way of a direct march through seizing most of the UK's industry and resource production. We need Britain to strat redeploy and fast or this war might be over before I even get to bring in reinforcements. Although you're correct that even if I lose I can still disrupt and delay Barbarossa with any luck.
 
...Although you're correct that even if I lose I can still disrupt and delay Barbarossa with any luck.

That's right, this isn't called `Last Man and Shilling` for nothing!
 
Well crud. There I was getting all excited and ready to exclaim 'Huzzah!' for HMS Hood participating in a naval action that did not result in it being promptly blown up, when the Huns go and spoil the party by A) hanging on to their pocketed Panzers and B) landing massive forces unopposed in the North of England. To put it in rather blunt terms, I think Britain is royally screwed. I hope I'm wrong - 'cos I'd like to see the Brits survive - but hey, I'm a pessimist at heart. ;)

Well, you can always head back to Sicily to slap some hapless Italians around, for therapy, once the British Isles fall to Hitler and his cronies. :) Oh, and then there's the Japanese to bother...
 
Flee! To the seas! Britain may be lost, but at least Australia will remain safe!
 
As a last resort I think you should hang on to Scapa Flow. It should be defensible and you will need a base for a counter-offensive.

I was looking up Marie José. Australian propaganda should make the most of rescuing her, since it's the only tangible benefit to come out of the Italian campaign and the unfolding disaster in Britain. Interesting that she is Queen of Italy, though. That means Umberto is King, so I'm wondering what happened to Vittorio Emanuele? Did Mussolini do away with him? :eek:
 
That's right, this isn't called `Last Man and Shilling` for nothing!

Exactly!

Well crud. There I was getting all excited and ready to exclaim 'Huzzah!' for HMS Hood participating in a naval action that did not result in it being promptly blown up, when the Huns go and spoil the party by A) hanging on to their pocketed Panzers and B) landing massive forces unopposed in the North of England. To put it in rather blunt terms, I think Britain is royally screwed. I hope I'm wrong - 'cos I'd like to see the Brits survive - but hey, I'm a pessimist at heart. ;)

Well, you can always head back to Sicily to slap some hapless Italians around, for therapy, once the British Isles fall to Hitler and his cronies. :) Oh, and then there's the Japanese to bother...

Hood is quite the ship, indeed, but she's apparently not enough to stop the Kriegsmarine from shipping troops to her heart's content. Britain does seem absolutely screwed, but alas, Australia will do everything in its power to stop this. Should England fall, Green and Gold will withdraw, lick its wounds, and quietly prepare for a large-scale naval invasion sometime in the future!

Japan is indeed a bother, what with China at their beck and call. Someone's going to have to deal with that mess and the US seems very slow on its feet in pushing in a war its started.

Flee! To the seas! Britain may be lost, but at least Australia will remain safe!

Don't need to flee yet! I've got plenty of battles left to fight, sir, and plenty of Jerries left to kill!

As a last resort I think you should hang on to Scapa Flow. It should be defensible and you will need a base for a counter-offensive.

I was looking up Marie José. Australian propaganda should make the most of rescuing her, since it's the only tangible benefit to come out of the Italian campaign and the unfolding disaster in Britain. Interesting that she is Queen of Italy, though. That means Umberto is King, so I'm wondering what happened to Vittorio Emanuele? Did Mussolini do away with him? :eek:

Scapa Flow, perhaps, but I'm reluctant on keeping any long-term bases in the area simply because the Luftwaffe is pounding my troops even with RAF cover and realistically I don't see Australia maintaining such a base so far from home in a plausible timeline. I could certainly do it because of the AI's inability to take well-defended naval positions, but that doesn't mean I should do it.

Australia will certainly have a meal out of the Italian situation, and I plan to unveil more as we go. First she's got to be shipped back to the safety of the homeland.
 
Really nasty event chain for the Aussies, that seem to be the only force that is actually doing something coherent to defend the British mainland ( really, the brit land actions seem to be quite disconnected and I'll refrain of talking about the RN ;) ) .

The fact that you were forced to choose between 2 evils was really bad and I wonder if it was the right call to try to stop the Germans of taking Portsmouth ( only time will tell, but I think you just postponed for some days the fall of Portsmouth, since there are no other Allies forces to fill the hole and it is ill advised for you to try to do it yourself with the breakout of the Panzer pocket ... and that is a manifest small gain for the cost in lives of that attack, not mentioning the fact that you lost the chance of finishing those 2 divs ), but in any of the options the situation around London after your decision would be pretty bleak ... and this before even counting with the second Boche landing north ( that ,as far as I can deduct is basically unopposed ... ).

This leaves you with little options in Europe: either you try to hold ground somewhere in the British islands by yourself ( either somewhere hilly, like the Scottish Highlands or where you can put water between you and the Axis forces like you did in Sicily ( Scapa Flow or N. Ireland ) ), that has the issues you already mentioned ( if the Germans can compete toe to toe with RAF and RAAF from the continental airfields, what hopes can you have when they control the Britain island airfields? To add, the water wall options basically require that the RN does its job, a thing that it already failed to do ... twice :( ) , or you go out of Europe entirely for now ( you couldn't keep the Med islands without the RN even before you evacuated most of your forces from there anyway ) and focus on the Japanese front for a while ( that has the heavy drawback of letting Europe to the somewhat dubious capabilities of USSR of stopping Germany until the USA get in the war ). Tough choice ...

Anyway, you should definitely move out of the London vicinity. There is little you can do there now and you are in a mild danger of being cut out of the northern areas of Britain if you let yourself to stay there much longer...

P.S I guess this is what the RL Brit government feared it would happen if Vichy was allowed to keep the French Navy intact and what fueled Mers el-Kebir :D This would probably would never happen without the precious collaboration of the Toulosian navy with Germany ...