The UK could not be defeated in the near future. Germany didn't have the amphibious forces or the navy to land many troops an British shores and was even less capable to supply them. This any landings would fail to achieve anything, just like the allied raid Dieppe. Hitler had hoped to get the Brits out of the war via a negotiated peace once they had clearly lost on the continent. There were people on the British cabinet who wanted to make a deal with Germany but Churchill was steadfast in his refusal to give up.

So with nothing else to do and Britain being unable to threaten the continent, Hitler decided to do what he had wanted to from the start, i.e. attack Russia. It didn't seem that difficult to pull off. The Red Army was going through a very bad time, many of their officers had been killed or arrested in Stalin's latest purges. German intelligence had underestimated the size of Soviet armored formations and crucially the Germans didn't have the faintest idea that the Soviets had developed heavy tanks. (There was some degree of suspicion, because the soviet officers had reportedly been astonished to hear that the Germans didn't have any tanks heavier than a PIV. But nothing came of that.) The sheer size of the country didn't deter the Germans either, since all the population centers and economy were known to be in the European part of Russia and they planned on capturing and using soviet trains for logistic. Thus they thought it entirely possible to capture Leningrad, Moscow and the Caucasus within on summer, starting once the wet period of spring had ended and reaching their targets before the wet period of autumn would begin. The Soviet Union would have been pretty much unable to recover from that. The German forces could then start to concentrate on whittling the Brits down, who would surrender or be starved into submission.

Yeah well, reality turned out to differ from almost all of that.