24 January Sighting the smoke from a large approaching force, Hipper headed south-east by 07:35 to escape but the battlecruisers were faster than the German squadron, which was held back by the slower armoured cruiser
Blücher and the coal-fuelled torpedo boats. By 08:00, the German battlecruisers had been sighted from
Lion but the older battlecruisers of the British 2nd Battlecruiser Squadron were lagging behind the 1st Battlecruiser Squadron. Chasing the Germans from a position astern and to
starboard, the British ships gradually caught up—some reaching a speed of —and closed to
gun range. Beatty chose to approach from this direction so that the prevailing wind blew the British ships' smoke clear, allowing them a good view of the German ships, while German gunners were partially blinded by their funnel and gun smoke blowing towards the British ships.
Lion opened fire at 08:52, at a range of and the other British ships commenced firing as they came within range, while the Germans were unable to reply until 09:11, because of the shorter range of their guns. No warships had engaged at such long ranges or at such high speeds before, and accurate gunnery for both sides was an unprecedented challenge but after a few
salvos, British shells straddled
Blücher. The British fire was concentrated on the battlecruiser
Seydlitz at the head of the line and
Blücher at the rear. With five British ships against four German, Beatty intended that his two rear ships,
New Zealand and
Indomitable, should engage
Blücher, while his leading three engaged their opposite numbers. Captain Henry Pelly of the new battlecruiser
Tiger assumed that two ships should concentrate on the leading German ship and engaged
Seydlitz, leaving
Moltke free to fire at
Lion.
Tigers fire was ineffective, as she mistook the shell splashes from
Lion for her own, when the
fall of shot was beyond
Seydlitz. At 09:43,
Seydlitz was hit by a shell from
Lion, which penetrated her after turret
barbette and caused an ammunition fire in the working chamber. This fire spread rapidly through other compartments, igniting ready propellant charges all the way to the
magazines and knocked out both rear
turrets with the loss of 165 men. Only the prompt action of a crewmember,
Wilhelm Heidkamp, in flooding the magazines saved
Seydlitz from a magazine explosion that would have destroyed the ship. The British ships were relatively unscathed until 10:18, when
Derfflinger hit
Lion with several shells, damaging her engines and causing flooding;
Lion lost speed and began to fall behind. At 10:41,
Lion narrowly escaped a disaster similar to that on
Seydlitz, when a German shell hit the forward turret and ignited a small ammunition fire but it was extinguished before causing a magazine explosion. A few minutes later, taking on water and
listing to port,
Lion had to stop her port engine and reduce speed to and was soon out of action, having been hit 14 times. At 10:30,
Blücher was hit by a shell from
Princess Royal, which caused an ammunition fire and boiler room damage.
Blücher had to reduce speed to and lagged behind the rest of the German force. Beatty ordered
Indomitable—his slowest ship—to intercept
Blücher. With his ships running short of ammunition, Hipper chose to steam for home, leaving the disabled
Blücher behind, to save his remaining ships. The annihilation of the German squadron appeared likely to the British until 10:54, when Beatty—believing he saw a submarine periscope on
Lions starboard bow—ordered a 90° turn to port, to avoid a submarine ambush (The "periscope" may have been a surfacing, run-out torpedo which had been launched 15 minutes earlier by the German destroyer
V5). At 11:02, realising that so sharp a turn would open the range too much, Beatty ordered "Course NE" to limit the turn to 45° and then added "Engage the enemy's rear", to clarify his intent that the other ships, which had now left
Lion far behind, should pursue the main German force. With
Lions electric generators out of action, Beatty could only signal using flag hoists and both signals were flown at the same time. The combination of the signal "Course NE"—which happened to be the direction of
Blücher—and the signal to engage the rear was misunderstood by Beatty's second-in-command, Rear-Admiral Moore on
New Zealand, as an order for all the battlecruisers to finish off
Blücher. The British battlecruisers broke off the pursuit of the German squadron and attacked
Blücher, with most of the British light cruisers and destroyers joining in. Beatty tried to correct this obvious misunderstanding by using the order from
Horatio Nelson at the
Battle of Trafalgar "Engage the enemy more closely" but this order was not in the signal book and Beatty chose "Keep nearer to the enemy" as the closest equivalent. By the time this signal was hoisted, Moore's ships were too far away to read Beatty's flags and the correction was not received. Despite the overwhelming odds,
Blücher put the British destroyer out of action and scored two hits on the British battlecruisers with her guns.
Blücher was hit by about and wrecked. When struck by two torpedoes from the light cruiser
Arethusa,
Blücher capsized at 54°25'N 5°25'E and sank at 13:13, with the loss of British ships began to rescue survivors but they were hindered by the arrival of the
Zeppelin L-5 (LZ-28) and a German seaplane which attacked with small bombs. No damage was done but the British ships put on speed and withdrew to avoid further aerial attack, abandoning some of the survivors. By this time, the rest of the German ships were too far away for the British to catch up.
Lion made at the beginning of the return voyage, escorted by
Indomitable. Beatty contemplated leaving a flotilla of destroyers to guard
Lion and sending the rest to the German Bight, to make a night attack on the German ships, but the damage to
Lion caused more problems. As she crept home, the ship suffered further engine-trouble from saltwater contamination in the boiler-feed-water system and her speed dropped to .
Lion was taken in tow by
Indomitable, an operation which took two hours, in which the battlecruisers were exceedingly vulnerable to submarine attacks. At 17:00, the voyage resumed, the ships working up . When the Grand Fleet arrived, Jellicoe increased the screen to thirteen light cruisers and 67 destroyers. A message from the Admiralty arrived that the Germans were planning a night destroyer attack but that the destroyers with the two scouting groups were low on fuel and those with the HSF were too far away.
25 January Lion and
Indomitable slowed to overnight when
Lion had more engine-trouble and at dawn were still short of the Firth of Forth. The destroyers reformed into an anti-submarine screen and the ships reached the firth at midnight; the destroyer
Meteor was towed into the
Humber Estuary.
Lion was out of action for four months, Fisher having decreed that the damage be repaired at Armstrong's on the Tyne, without her going into
dry dock, making for an extremely difficult and time-consuming job. The surviving German ships reached port;
Derfflinger was repaired by 17 February but
Seydlitz needed a dry dock and was not ready for sea until 1 April. ==Aftermath==