Ralph receives a call from Miranda that they shouldn't see each other anymore. Heart-broken, Ralph decides to look at the prospect of Princess Anne (Joely Richardson) from Finland as a future bride. There is to be a lavish state banquet, and the King's aides prepare him for the big occassion - which will also bring in much needed manufacturing work to the country through a trade treaty.
To throw a spanner in the works, Lord Percival invites Miranda to the banquet.
At the meal, Ralph clumsily knocks over his glass, which causes a domino effect down the long line of seated guests, spilling red wine onto everybody. He cleans himself up, and after a pep talk by his aides is back on track.
Finally the occasion is going well, although a little stale for King Ralph. While dancing with Princess Anne he is alarmed by her very mannish voice, and while chatting outside is scared off by her sudden saucy talk. It is then that Ralph sees Miranda in the ball room. To spice up the evening, he grabs the nearest harpsichord and belts out a rendition of "Good Golly Miss Molly". It doesn't go down too well.
Meanwhile, Lord Percival shows a series of photographs to the King of Finland of the time Ralph and Miranda were together. Outraged, the Finnish Royal family storm out. The deal is off. Miranda is embarrassed, and also leaves.
All across the news the King is blamed for ruining the prospects of the UK, and in Parliament Lord Percival calls for an end to the reign of King Ralph.
Ralph calls round to Miranda's humble family home to apologise. Instead he finds out the truth that she was approached by Lord Percival and paid to start a relationship and pose for the photographs. Ralph is understandably angry, but she tells him that she didn't take the money and refused to do it once she realised she had feelings for him. Ralph feels suddenly very alone, and is not sure whether he wants to continue as King anymore.
King Ralph knows he has messed up. He starts to ask questions to his aides to find out why he was chosen. Phipps has a sworn duty to help him, so he asks if there were any other claims to the throne -- there was one. Ralph confronts Sir Cedric. Sir Cedric had an equal claim it seems, but was unable to cope with the position, so he cowardly passed it over to Ralph. He apologises, but says that is the reason why he has tried to help him all this time.
Ralph tells his aides that he will address Parliament - but first he must make some calls.
Parliament is full as Ralph delivers his televised speech. He tells the audience that he has spoken with the wealthy ruler of an African nation, and has agreed a huge manufacturing deal for engine parts to benefit those in the North East. The television audience, and a few punks watching it on a store TV, cheer. He then points the finger at Lord Percival, and under the treason act has him taken away for trying to usurp the throne.
He then tells them that he has decided to step down - and instead someone with an equal claim, but better character and pedigree to become King will take his place. Sir Cedric stands, and the MPs all shout "Long live the King".
Back in the Palace, Ralph is getting ready to leave. Sir Cedric says he might redecorate a little after he leaves and lose the juke boxes. Ralph is offered a country mansion and an annual sum of money - he refuses, but then thinks it over when he hears it will have a recording studio.
As it ends, Ralph is performing the "Duke of Earl" with his band - the Dukettes, watched by Miranda and a little baby Ralph, in his recording studio -- which is just a small part of a huge country mansion within acres of land.