A naval arms race between Britain and Germany is often cited as a contributing factor in the start of World War I. There may be other factors that caused the war, which began in central and eastern Europe. However, there must also be something that led Britain to get involved. Given this, it's easy to see why an arms race between two later warring powers would be seen as a cause. The jingoism of the press and people and the normalization of the idea of fighting each other is as important as the presence of the actual ships.
Britain 'Rules the Waves'
By 1914, Britain had long viewed their navy as the key to their status as the leading world power. While their army was small, the navy protected Britain's colonies and trade routes. There was huge pride in the navy and Britain invested a great deal of money and effort to hold to the 'two-power' standard, which held that Britain would maintain a navy as large as the next two greatest naval powers combined. Until 1904, those powers were France and Russia. In the early twentieth century, Britain engaged in a large program of reform: better training and better ships were the result.
Germany Targets the Royal Navy
Everyone assumed naval power equaled domination, and that a war would see large set piece naval battles. Around 1904, Britain came to a worrying conclusion: Germany intended to create a fleet to match the Royal Navy. Although the Kaiser denied this was his empire's aim, Germany hungered for colonies and a greater martial reputation and ordered large shipbuilding initiatives, such as those found in the 1898 and 1900 acts. Germany didn't necessarily want war, but to browbeat Britain into giving colonial concessions, as well as boosting their industry and uniting some parts of the German nation - who were alienated by the elitist army - behind a new military project everyone could feel part of. Britain decided this couldn't be allowed, and replaced Russia with Germany in the two-power calculations. An arms race began.
The Naval Race
In 1906, Britain launched a ship which changed the naval paradigm (at least to contemporaries). Called HMS Dreadnought, it was so large and heavily gunned it effectively made all other battleships obsolete and gave its name to a new class of ship. All the great naval powers now had to supplement their navy with Dreadnoughts, all starting from zero.
Jingoism or patriotic sentiment stirred up both Britain and Germany, with slogans like “we want eight and we won't wait” used to try and spur the rival building projects, with the numbers produced rising as each tried to outdo each other. It's important to stress that although some advocated a strategy designed to destroy the other country's naval power, much of the rivalry was friendly, like competing brothers. Britain's part in the naval race is perhaps understandable - it was an island with a global empire - but Germany's is more confusing, as it was a largely landlocked nation with little that needed defending by sea. Either way, both sides spent huge sums of money.
When the war started in 1914, Britain was held to have won the race by people looking just at the number and size of the ships, which was what most people did. Britain had started with more than Germany and ended with more. But Germany had focused on areas that Britain had glossed over, like naval gunnery, meaning her ships would be more effective in an actual battle. Britain had created ships with longer range guns than Germany, but German ships had better armor. Training was arguably better in the German ships, and British sailors had the initiative trained out of them. In addition, the larger British navy had to be spread over a larger area than the Germans had to defend. Ultimately, there was only one major naval battle of World War I, the Battle of Jutland, and it is still debated who really won.
How much of the First World War, in terms of starting and willingness to fight, was down to the naval race? It is arguable that a notable amount can be attributed to the naval race.