Although Americans have embraced Winston Churchill as one of the great statesmen of the 20th century, he has never enjoyed unqualified adulation in his own country. Hitler was anxious for a peace deal. He respected the British and never had any faith in invasion plans drawn up by his generals.
Churchill had no illusions about peace with the Nazis. He had seen what had happened to the other states that made peace with Hitler: Austria, Czechoslovakia, Holland, Belgium, etc. They were mere puppet states similar to the Soviet satellites.
Churchill knew the Germans would want the British fleet surrendered making liberation of Britain more difficult. Churchill believed he had a duty to preserve the British Empire. In November 1942, Churchill had said that "I have not become the King's First Minister in order to preside over the liquidation of the British Empire."
Finally, he knew peace through a surrender would mean the end of Great Britain. British Foreign Secretary Lord Halifax had urged Churchill to plea for peace before the full fury of the German Luftwaffe was unleashed over London skies. Churchill replied, "Nations that go down fighting rise again, but those who surrender tamely are finished."