After a conversation with our gentle friend @Baron Steakpuncher I was told that as better things might get in some areas, sadly the british never will catch up with their modern standard of living or diplomatic power
To be honest, that is to be fully expected. After all, unlike OTL, TNO Britain would, at the very minimum, be bombed flat by the Nazis as well as having many of the cities turned into Stalingrad-style battlefields during WW2; Not to mention having endued 20+ years of balkanization, Nazi occupation, and low intensity guerrilla warfare that eventually turned into all out civil war. And that is even before getting into the fact that England would have been largely cut off from the international market due to the OFN embargo combined with Germany's economic cluster f*ck, or the brain drain resulting from all the people fleeing overseas to the US and Canada via Scotland.
For TNO Britain, the
City of London, for example, will never be able to regain its position as one of the world's most important business and financial centers, and
Rolls-Royce will not be one of the leaders in the aerospace industry.
Thinking about it, I think TNO Britain can be compared to a mix of OTL Turkey
(Going from having once been a mighty empire to a shadow of its former self after being defeated in a war. Might try to pull a dramatic shift back towards greater international engagement later on, but will remain a regional power at most), Thailand
(An active US strategic ally in the Cold War used for the power projection for the former in this part of the world... But clearly the junior partner that is more or less subordinate to the wishes of Washington and dependent on Western money), and the Czech Republic
(Having once been an industrial and economic powerhouse in its own right... That sadly got wrecked as a result of occupation by a foreign power. Eventually managed to break free and re-intergrade with the world economy, allowing it to flourish... But never managed to fully regain the place it once had).
Which is why in my TNO head canon, the NDL government under Jellicoe went with the reintroduction of battleships for the Royal Navy instead of shifting to aircraft carriers, and listened to Arthur Harris' heavy strategic bombing focused approach when developing a new doctrine for the Royal Air Force instead of listening to their American and American-educated advisors who told them to focus on jet fighters.... The same reason that in OTL the East German military retained so much Prussia influence and traditions despite being communist: Because they were so desperate to assert themselves as a sovereign nation.
On the 'plus' side... In my experience, the TNO world is so wrecked in general that even with just England alone before the British reunification, the country tends to be the second largest economy in either the Einheitspakt or OFN depending on which side they ended up joining. So that should still give them some muscle to throw around on the international stage.... Even if that is more a reflection on just how poorly the rest of the world is doing instead of any sign of how great things are for England.