From October 1964 until January 1968 the Labour government sought to preserve the UK's status as a world power. Its efforts overstretched the British armed forces, which already had to cope with the two conflicts Britain was involved in, in Borneo and South Arabia. Wilson's Cabinet endorsed two crucial decisions affecting British defence policy; the retention of the UK's nuclear deterrent and the introduction of the Polaris ballistic missile submarines, and the withdrawal from the Middle East and South-East Asia of all but a token British military presence, in order to focus on NATO's defence. In March 1967 the OPD decided to withdraw half of all British forces from the Persian Gulf and South-East Asia (excluding Hong Kong) by 1970–1, with the remainder leaving both theatres by 1975–6. In the aftermath of the devaluation crisis the Cabinet decided on 15 January 1968 that the military withdrawal would be completed by December 1971. MPs were informed of this decision when Wilson addressed the Commons the following day.

Of these two developments, it was the withdrawals from East of Suez that caused the most controversy. Labour entered office sharing the Conservatives' view that Britain could still act as a global power because of its Commonwealth role and its links with former colonies. Wilson's grandiose statement that Britain's frontiers lay on the Himalayas reflected the priority the new government placed the UK's ‘world role’.