The Z plan had nothing to do with British "response". The RN did not respond to the Z plan, but before anything, Japanese and Italian ambitions at sea. Even the six to eight (2 Bismarck and 6 Hs) planned new large battleships would not pose a serious challange to RN numerical superiority. The Anglo German Naval Treaty was signed just for that, the British wanted to avoid an arms race with Germany at the sea, realizing that they were going to build ships anyway, and they could not hope to win an arms race with the Italians, the Japanese AND the Germans.
Also the AGNT provided that the Germans can reach parity with the RN in submarines, and only some very mild terms were set in there about a preference and prior talks before exceeding 50% of submarine tonnage.. all the Germans were obliged to was to discuss first instead of just doing it anyway. The terms of the treaty were dictated by Ribbentrop in a fairly unconventional and somewhat rude manner, but it satisfied both parties.
Sorry bu incorrect. I will dig out the changes to Naval estimates for Britain in 1939, but britains foreign policy in 1939 had very little to do with concerns about Japan or Italy. italy in 1939 was being courted as a potential ally in the approaching war. Britsh plans concerning Japan was one of containment and a reliance on French support. Britsh concerns were squarely related to German aggression and the abandonment of the Britsih _German Naval Agreement (AGNA) was a very big part of those plans.
At a meeting on April 16, 1938 between Sir Nevile Henderson, the British Ambassador to Germany and Hermann Göring, the latter stated it [the A.G.N.A.]had never been valued in England, and he himself bitterly regretted that Herr Hitler had ever consented to it at the time without getting anything in exchange. It had been a mistake, but Germany was nevertheless not going to remain in a state of inferiority in this respect vis-à-vis a hostile Britain, and would build up to a 100 per cent. basis".[64] In response to Göring's statement, a joint Admiralty-Foreign Office note was sent to Henderson informing him that he should inform the Germans that:
"
Field Marshal Göring's threat that in certain circumstances Germany might, presumably after denouncing the Anglo-German Naval Agreement of 1935, proceed to build up to 100% of the British fleet is clearly bluff [emphasis in the original]. In view of the great existing disparities in the size of the two navies this threat could only be executed if British construction were to remain stationary over a considerable period of years whilst German tonnage was built up to it. This would not occur. Although Germany is doubtless capable of realizing the 35% figure by 1942 if she so desires, or even appreciably earlier, it seems unlikely (considering her difficulties in connection with raw material, foreign exchange and the necessity of giving priority to her vast rearmament on land and in the air, and considering our own big programme) that she would appreciably exceed that figure during the course of the next few years. This is not to say we have not every interest in avoiding a denunciation of the Anglo-German Agreement of 1935, which would create a present state of uncertainty as to Germany's intentions and the ultimate threat of an attempt at parity with our Navy, which must be regarded as potentially dangerous given that Germany has been credited with a capacity for naval construction little inferior to our own. Indeed, so important is the Naval Agreement to His Majesty's Government that it is difficult to conceive that any general understanding between Great Britain and Germany, such as General Göring is believed to desire, would any longer be possible were the German Government to denounce the Naval Agreement. In fact, a reaffirmation of the latter in all probability have to figure as part of such a general understanding. From the political aspect, the German Navy has we think been to Germany mainly an instrument for putting political pressure on this country. Before the war, Germany would have been willing to cease, or greatly moderate, her naval competition with this country, but only in return for a promise of our neutrality in any European conflict. Hitler has attempted the same thing by different methods, but he has seen one side of the picture as all German politicians have only seen one side of the picture. "
By the late 1930s, Hitler's disillusionment with Britain led to German foreign policy taking increasing anti-British course.
An important sign of Hitler's changed perceptions about Britain was his decision in January 1939 to give first priority to the Kriegsmarine in relates in the allocation of money, skilled workers, and raw materials and to launch the Plan Z to build a colossal Kriegsmarine of 10 battleships, 16 "pocket battleships", 8 aircraft carriers, 5 heavy cruisers, 36 light cruisers, and 249 U-boats by 1944 to crush the Royal Navy.[
Since the fleet envisioned in the Z Plan was considerably larger than that allowed by the 35:100 ratio in the A.G.N.A, the Z Plan made it inevitable that Germany would renounce the A.G.N.A. Over the winter of 1938-39, the fact that it became increasing clear to London that the Germans no longer intended to abide by the A.G.N.A played a role in straining Anglo-German relations, and this evooked an inevitable response from the british, including accelarated naval rearmament. . Reports received in October 1938 that the Germans were considering denouncing the A.G.N.A were used by Lord Halifax in Cabinet discussions for the need for a tough policy with the Reich, and led to increses in naval expenditures. The German statement of December 9, 1938 that they intended to build to 100% ratio allowed in submarines by the A.G.N.A. plus to build to the limits in heavy cruisers led to speech by Chamberlain before the correspondents of the German News Agency in London warning of the "futility of ambition, if ambition leads to the desire for domination", and again to a further review of naval re-armament (there is patter here, in case you are left wondering...every time germany made aggressive plans at sea, there was a superior response from the british to contain that aggreswsion) .
At the same time, Lord Halifax informed Herbert von Dirksen, the German Ambassador to Britain that his government viewed the talks to discuss the details of the German building escalation as a test-case for German sincerity. When the talks began in Berlin on December 30, 1938, the Germans took an obdurate approach, leading London to conclude that the Germans did not wish for the talks to succeed. Guess what that led to....the 1939 emergency program...
In response to the British "guarantee" of Poland of March 31, 1939, Hitler, who was enraged by the British move, stated "I shall brew them a devil's drink". In a speech in Wilhelmshaven for the launch of the Admiral Tirpitz battleship, Hitler threatened to denounce the A.G.N.A. if the British persisted with their "encirclement" policy as represented by the "guarantee" of Polish independence. On April 28, 1939 Hitler denounced the A.G.N.A. To provide an excuse for the denunciation of the A.G.N.A, and to prevent the emergence of a new naval treaty, the Germans began refusing to share information about their shipbuilding,and thus left the British with the choice of either accepting the unilateral German move or rejecting it, thereby providing the Germans with the excuse to denounce the treaty. At a Cabinet meeting on May 3, 1939, the First Lord of Admiralty, Lord Stanhope stated that "at the present time Germany was building ships as fast as she could but that she would not be able to exceed the 35 per cent ratio before 1942 or 1943".Chatfield who by this time was serving as Minister for the Co-ordination of Defence commented that Hitler had "persuaded himself" that Britain had provided the Reich with a "free hand" in Eastern Europe in exchange for the A.G.N.A. Chamberlain stated that Britain had never given such an understanding to Germany, and commented that he first learned of Hitler's belief in such an implied bargain during his meeting with the Führer at the Berchtesgaden summit in September 1938. In a later paper to the Cabinet, Chatfield stated "that we might say that we now understood Herr Hitler had in 1935 thought that we had given him a free hand in Eastern and Central Europe in return for his acceptance of the 100:35 ratio, but that as we could not accept the correctness of this view it might be better that the 1935 arrangements should be abrogated". In the end, the British reply to the German move was a diplomatic note vigorously disputing the German claim that Britain was attempting to "encircle" Germany with hostile alliances. The German denunciation of the A.G.N.A. together with reports of increased German shipbuilding in June 1939 caused by the Z Plan played a significant part in persuading the Chamberlain government of the need to "contain" Germany by building a "Peace front" of states in both Western and Eastern Europe, and of increasing the perception within the Chamberlain government in 1939 that German policies were a threat to Great Britain.
Source is wiki, however this text is almost word for word from the following
Maiolo, Joseph The Royal Navy and Nazi Germany, 1933-39 A Study in Appeasement and the Origins of the Second World War, Macmillan Press: London, 1998