The period between the Glorious Revolution and the South Sea bubble has long been recognized as a particularly significant period in British and Irish financial history. This was the age of the ‘financial revolution’. This revolution has traditionally been understood to encompass the series of English financial innovations in the period immediately after the constitutional and political revolution of 1688–89. These included the creation of a national debt, the foundation of the Bank of England in 1694 and the development of a sophisticated system of war financing, all of which enabled William III to continue his continental military conflict with Louis XIV's France following William's ascent to the English, Scottish and Irish thrones. The same period also saw the rise of joint-stock trading companies and the emergence of the London stock exchange as an important financial centre. Rapid developments were also visible in private banking, with a concomitant spread of paper money and bills of exchange as a circulating medium. Cumulatively, these innovations comprised a revolution and have been seen as laying the foundations of modern capitalism.

The fusion of these financial innovations with an increasing centralized and efficient state bureaucracy has led historians, notably John Brewer, to describe the emergence of an English, and after 1707 a British, fiscal-military state. The English/British state's growing ability to mobilize its financial resources, and to develop more efficient and reliable forms of war financing, were crucial to its emergence as a great power in the first half of the eighteenth century.