As for UK destroying Italian fleet, that means UK would be prone to a possible Sealion attack. By Germany placing main navy in baltic SZ113, UK cannot enter with whatever is left of its navy near UK (which in the example i described would be 1 destroyer, 1 cruiser, 1 transport). The only German naval units UK can attack would be any subs that survived G1.
The German builds would clarify the viability of that. If Germany didn’t also buy also transports and or planes, that would be a paper tiger.
UK can kill Italian fleet and still buy infantry or whatnot to thwart a German sea-lion that didn’t have the use of her builds for that purpose.
If Germany did prepare 100% for sea-lion with her builds, then yes UK would need to just build her fleet, but that forces Germany to not play to her strengths by developing her army, and allows UK to properly develop her strength which is naval.
So the bottom line is it allows UK to gain right?