January, 1938: Lady Alice celebrates her 70th birthday surrounded by family and friends. Arthur defends his stand against Conservative policy, and Phyllis has surprising news.
Liz's medical skills prove vital in a difficult birth, and she also scores a tactical triumph when she takes Phyllis to see the baby boy. Elsewhere, Arthur lunches with journalist Angela again.
Rosie and Lady Mary Cranford have organised a Red Cross benefit concert, but with the pianist struck down by bronchitis, Vicky is persuaded to do the honours...
News of the Anschluss reaches Larkfield, while the situation of the happily pregnant Phyllis Poole contrasts sharply with that of an estate worker and his pregnant wife, who face eviction.
Nearby Ellesmore Estate is earmarked to be turned into a factory. Arthur joins the protest, but it is Angela who makes the conclusion an anticipated celebration for all concerned.
The gathering storm in the outside world is reflected in traumatic events at Larkfield, with a fatal road accident and tragedy for an estate worker causing concern for Arthur.
Phyllis tries not to worry about Jack, who is competing in the King's Cup air race, while a secretly married Peter and Laura share a blissful week in the South of France.
While the Bournes try to take their minds off the prospects of war with a light-hearted home movie, Arthur is angered by Government inactivity in the face of German re-armament.
It is now August 1938. Phyllis and Jack are preparing to leave for La Touquet with baby son William. Geoffrey's girlfriend has left him, and Nanny's behaviour is a cause for concern.
Arthur is horrified to hear that Liz has been arrested during an anti-appeasement march in London, and Laura and Peter find their wedding boycotted as a result...
Laura and Peter's wedding dominates the thoughts of the Bourne and Cartland families, but Arthur has deepening financial worries.
Preparations for war are all around. Jack expects to join the RAF; Peter receives orders to stand by; Laura plans to join one of the woman's services. Vicky is determined to follow Klaus to Germany...
Arthur is alone in voicing his reservations on the terms of the Munich Agreement. Vicky has discovered the truth about Klaus, and there is devastating news for Laura.