Well, rising tensions are an understatement. Herr Hitler is clearly serious in his stated ambitions for the German people. It begins with the Anschluß of Austria in March 1938:
We are not remotely happy about this, but what can we do? Not a lot while our armed forces are still in such a weak state. We will have to wait before tackling Germany until we are either ready for war (is one ever truly ready for war?) or until Herr Hitler does something completely intolerable.
We will not be caught completely back-footed whatever though. Technology development proceeds apace. Heavy investment in our spy networks is paying off, and we are beginning to realise the true potential of Mr Einstein’s equations:
Our ability to research more advanced technologies now looks something like this:
However, the most important poltical event of the year is the Sudeten Crisis, which really begins in July:
Unfortunately, the mission does not achieve much apart from confirming what we already strongly suspected about Herr Hitler’s intentions. Things really begin to kick off in mid-September, and are brought to a conclusion by the beginning of October:
Through a combination of strong arm tactics and wily political manoeuvring, it seems that Herr Hitler has got his way. Wherever will be next? Poland? This is clearly not the end of his ambition – far from it – and so there seems no other option but war in the next few years.
The British Empire 
Nice AAR!
Do I see it correctly that you can’t even decide on whether to sign the Munich Agreement? Seems kinda strange to me.
Thanks!
I think you can chose whether or not to sign it. I don’t think I grabbed every single one of the events, unfortunately. I’m sorry if that’s a bit confusing.