World War I was a huge drain to Britain's resources. The Great Depression weakened it still further.
Britain might have recovered eventually however, if it had not been for World War II.
Unappreciated by many Americans is the fact the Britain sold all of its extensive overseas financial interests to pay for the war. It was the final, crippling blow to the British Empire. Britain would have eventually lost its colonies anyway. However, it would have still maintained a much greater degree of power and influence had World War II not happened.
This is grossly simplified, of course, but those are the main reasons.