Debt and Dependence:
European nations emerged from the war heavily indebted, particularly Britain and France, which had borrowed extensively from the USA. This created long-term financial dependence and disrupted economic sovereignty.

Industrial Decline:
War had destroyed major industrial centers, especially in France and Belgium. Machinery and infrastructure were damaged or obsolete, leading to a drop in manufacturing output and economic slowdown.

High Unemployment:
The return of millions of soldiers created a surplus labor force. Coupled with reduced industrial activity, this led to high unemployment and growing social unrest.

Inflation and Currency Devaluation:
Many governments had printed money to finance the war, causing inflation. Germany, in particular, faced hyperinflation by the early 1920s, devastating savings and destabilizing the economy.

Agricultural Crisis:
Farmland in war zones was ruined. There were food shortages, reduced agricultural output, and high food prices, which worsened living conditions for ordinary people.

Trade Disruption:
Pre-war trade networks were destroyed or realigned. Newly drawn national borders and protectionist policies (tariffs) restricted the movement of goods, limiting economic recovery.

Social Spending and Welfare Burdens:
The demand for state welfare increased as governments had to support war veterans, widows, and the unemployed, placing more strain on national budgets.

Decline of Global Dominance:
European economic dominance declined as the USA and Japan emerged stronger. The global economic center began shifting from Europe to the United States.

Political Instability Tied to Economic Hardship:
The economic crisis led to disillusionment with liberal democracies, fueling the rise of extremist ideologies, including fascism and communism, especially in Italy and Germany.