Blain’s Morning Porridge June 11^th, 2026 – UK Defence Investment Plan delayed again!

“To avoid war – be prepared to fight.”

The UK’s Defence Investment Plan has been delayed yet again, mired in cabinet warfare on spending. The DIP will focus on big projects like a new fighter-jet but will make a nod to the lessons learnt in Ukraine. The big issue is how the defence industry will evolve away from Defence Primes towards financing the start-ups that can change the battlespace with new tech that is adaptable, available now, cheap and good-enough.

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There was a defence conference and exhibition a few weeks ago in Kiev. My colleagues from Spitfire Strategic Capital were there. A retired British 4-star general, and former Deputy Supreme Commander of Nato, (who is on our advisory board), looked around the exhibition of Ukraine weaponry and quietly commented, “for 1/10^th of the budget I could build the army of tomorrow, instead of spending it all on the army of yesterday.”

There is a blunt reality to war: When deterrence stops working you are either the aggressor or hope the enemy won’t attack until you are ready. As we all know – hope is never a strategy. Today the defence of the UK is hiding behind hope. Our armed forces are willing and brave, but unprepared, undermanned and poorly-equipped for modern war – which will be fought in a battlespace that has been constantly evolving since the invasion of Ukraine in 2022.

In a world of rapidly shifting Geopolitics, instability, threats and the de-facto collapse of the Transatlantic Relationship, defence should be the Nation’s number one priority.

Yet the government dithers.

Today we were expecting the long-delayed Defence Investment Plan to be published – detailing how the Government will spend money to re-establish the UK’s strategic deterrence.

Instead, the DIP has been delayed yet again. Political infighting within Sir Keir Starmer’s cabinet between ministries furious they’re being asked to cut spending to boost the defence of the UK made an agreement impossible. Starmer may be a great lawyer, but yet again he’s proving a political dud and no great decisive leader.

In Economics 101 students learn about the Guns vs Butter choices on government spending. The critical thing is being able to make the tough decisions. Starmer is failing that basic test. I was told proposed deals to cut welfare and environment budgets to fund the massive £28 bln blackhole in the UK defence budget proved irreconcilable last night.

The UK’s global credibility is suffering. Our allies in Europe see the dither at the heart of Government. Our military credentials to be at the forefront of a united new European defence alliance are diminished – and thus the likelihood UK firms will share in the new spending programmes to defend Europe is diminished. UK defence industries are paralysed as they wait for programmes to be approved. The arteries of defence finance to launch new start-up, early-stage initiatives are blocked.

It now looks unlikely the DIP will be released much ahead of the NATO summit in early July.

What we do know is a significant portion of the DIP will be focused on “Exquisite” weapons – the big projects that take decades to deliver and are most prone to procurement cost and capability overrun. However, it will also acknowledge the lessons from Ukraine (and the Iran Not-a-War) on the need for inexpensive, good-enough, available now weapons, and the requirement that weapon systems must be simple to upgrade, adaptable and able to link across the battlespace.

It’s probable the DIP will involve a shift towards AI, Drones and Autonomous weapons and encourage investment into UK firms to fill these needs. It will confirm the Nuclear Deterrent is untouchable. It will commit to the new Tempest fighter (which many believe is already a hopeless, overly complex, compromised fatherless-son of a project unless it’s part of new unified European defence confederation.) It will stress the importance of new domestic manufacturing capacity for war stocks.

It may convince the market there is going to be more defence spending, and the market being the market will try to predict winners and losers.

At Spitfire we believe the key to the defence of the West lies in capital markets – making pooled capital (through the fund) available to finance the reinvigoration of defence industries across the Post-US western economy; Europe, Japan, Korea, Australia and Canada – that will be done by encouraging innovation by investing across start-ups, early stage and established firms with new ideas and approaches.

Yet, the most common investment approach to defence is to simply invest in the Defence Primes, on the basis they will receive the bulk of orders European nations and the UK will have to place.

On name that many believe will benefit is Anduril, “The Flame of the West”. It is the sizzling-hot upstart US Defence firm named for a sword in The Lord of the Rings. It is moving and shaking the defence industry with its expanding range of modern, relatively cheap, and deliverable tech. It focuses on smart, autonomous and software driven weaponry. It is AI adjacent. Its impressive – producing big, burly, highly capable American weapons at “affordable” prices.

It presents itself as the new, new thing… but it’s swiftly becoming a Defence Prime, increasingly likely to become the new face of the US Military Industrial Complex.

Anduril promises much – but is it relevant to the rearmament of Europe? At present up to 65% of weaponry in Europe is already sourced from US suppliers – a massive boost to US defence Primes selling Europe Apache helicopters, F-35 fighters, rocket (HIMARS) launch systems, command and control systems, sensor system and air defence batteries like Patriot.

Anduril is only 9 years old, put together by Oculus founder, Palmer Luckey, after he sold his VR headset firm to Facebook for a couple of billion. He met Peter Theil – the billionaire Tolkien fanboy and the brains behind the Founders Fund and Anduril’s sister Firm, Palantir – and the rest is history. Luckey and Theil saw a clear market gap – how the Defence Primes had become bureaucratic edifices milking procurement budgets but failing to innovate new technologies and production paths into the defence sector. If I were a cynic, I might say that following the 1990s peace dividend the Primes established themselves as high-value, high-margin parasites feasting on procurement budgets.

Luckey’s firm wants Anduril to seize a significant part of Europe’s defence business. (Just like Palantir wants to Europe to appoint it to rent us back our data and the functionality of national utilities.) But given the growing distrust across the Pond, the breakdown of the “Transatlantic Relationship”, and Trump’s contempt for Nato – it would clearly be daft for Europe to continue buying US arms. The fact Peter Thiel is now closely associated with his support of the Trump Administration is another aspect of Anduril that will give pause to Western Governments engaging with it.

Europe has the potential to build its own internal market and manufacturing base for European defence goods and services. It should generate significant multiplier effects; creating jobs, employment and growth, and spawning new commercially applicable technologies. It will be expensive to build defence from the bottom up, and mistakes will be made… but planes, missiles, ships and guns that aren’t subject to future Trumps switching them off is a better defence option.

To give the impression of being a European firm, Anduril’s European head (a Brit) recently told a European defence conference it’s looking to acquire European start-up defence firms – providing the capital new European defence firms will need. It’s a tried and tested US business strategy – use the depth of US capital markets to fund the capture of early-stage European technologies and patriate them to the US!

Given the widespread distrust of Trump, it’s no surprise Europe is looking away from the state towards Ukraine. They don’t wear beach-shorts and they are proven. Ukraine’s armed forces have turned back the Russian horde while literally forging the new drone-based battlespace which they dominate. In the 4 years of battle, Ukraine has gone from a rounding error on the Russian invasion schedule to an effective all-arms force that now seriously threatens to topple the enemy – despite Trump’s best efforts to favour Putin! Slava Ukraine!

The big question is – can the UK and other European states turn around the crisis in defence?

To understand the depth of the crisis at the heart of procurement and where it has led us, look at state of the UK’s defence today. We remain one of the highest spending nations on defence, but our defence forces have been pared back to the bone.

• The Royal Navy is a shadow of what it once was, able to float a couple of destroyers, a frigate or two, 2 wheezingly arthritic aircraft carriers, and not a single attack submarine at sea. All its current vessels are under-armed. Most of its ships and boats are stuck in long-term maintenance or repair, while the force is chronically undermanned. It could be years before new vessels come online to defend the nation – by which time wars fought at sea will have undergone dramatic drone led transformation.
• The Army is short of soldiers and fielding a fraction of the drones the Ukraine conflict has proved necessary for today’s warfare. It’s plans to field a digitised recon, strike and armoured force is years down the road – when new tech to defend from drones and robotise land warfare is developing swiftly. While other armies are innovating new swift production and procurement policies and platforms – the UK armed forces remain bound to Whitehall civil servants.
• The RAF has 2 squadrons to barely defend the UK. It’s frontline fighter, the Typhoon, is old school and has proved a Jack of all trades, but master of none. The few F-35 Bs are earmarked for Navy use, and because the 2 floating targets lack catapults, the planes are short-range with limited offensive punch.
• Critically, the UK lacks the 5 generation production capabilities that will be needed. The skill sets required have been lost as workers were laid off or retired. To achieve the kind of success Ukraine has achieved in its battle for survival would require a commitment to a wartime economy that is unthinkable in the UK today. Ukraine has risen to the challenge, showing it could cobble together effective dispersed production. (I recently met a senior Anduril exec. I asked how they could justify their cost for a missile compared to a similar, much cheaper, piece of kit from a Ukraine producer. He told me their missiles are made in real factory, not “knitted by grannies in a basement somewhere”. I think he missed the point – dispersed production in a war zone is genuine resilience – not weakness.

The bottom line is that defence is not a luxury, but a requirement for all Nations: to avoid war, you need to be prepared to fight it.

The future of warfare has never been evolving so quickly as new tactics, strategies, technologies, automation, AI and now robotics find their place in the battlespace. To prevail in such an environment requires leadership and experience from the war fighters, but also the ability to scale up the production of adaptive and good-enough (cheap) munitions and weapons and keep ahead of the evolution of counter-weapons to each new iteration.

Defence primes – which are seeking long-term profits from exquisite prestige programmes (like the next 6^th Generation Fighter) are to slow, non-adaptive and bureaucratic to fill the immediate needs of war fighters. That’s why the Ukraine “fail-fast” approach to innovating new tech, battlespace adaptation and highly experienced, well-led troops is working. In contrast, the Russian junior officers and NCOs that could have taught their men to learn from their mistakes are long buried in the black soil of the nation they invaded.

What is needed for the West to follow the Ukraine example is capital directed to the firms that can invent and innovate the next iterations of battlespace supremacy – adaptive, effective, good-enough and available now. That is what Spitfire Strategic Capital seeks to achieve.

Out of time and back to the day job…

Bill Blain

Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital

Meanwhile, don’t forget about my new book:

The Battle For Hamble is a proper grown-up examination of how bureaucracy has failed: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It explains how a wholly unnecessary Gravel Quarry will be dug in middle of a prosperous village – putting 6000 jobs at risk. The truth is no one wants gravel, and the quarry company understands it’s not what you dig out, but what you stuff back into a hole in the ground that matters. Gravel sells for £30 a tonne – Landfill earns £150 a tonne to bury. Go figure.