Blain’s Morning Porridge November 11^th, 2026 – Armistice Day? Preparing for the next war.

“The Flowers of the Forest are a’ wede away.”

To avoid war we must be prepared to fight – that a basic dictum from history. While the conflict pressures mount, and political systems are increasingly strained, the defence of Western Economies in a post-Nato era will require massive private capital investment. But many investors are not prepared to step up and finance defence. It’s an attitude that has to change.

LINK TO PODCAST 

Key Takeaways:

• The West needs to rearm to avoid having to fight a future war. The establishment of strategic deterrence to force Russia to stand down is critical. Russia is milking Trump’s appeasement.
• Europe’s readiness depends on the resilience of its people and its capacity to sustain a fight. Not only do we require deeper reserves of trained warfighters, but secure supply lines for ammunition, equipment and parts and the ability to protect them.
• Europe needs strategic control of its defence infrastructure. Elon Musk’s abuse of Ukraine when he shut down Starlink and the suspicion a corrupt US president may use kill switches in US kit to favour Russia, means domestic sourcing and control is paramount.
• US investors are moving fast to garner control of the new emergent defence technologies, understanding how the defence market is changing. European investors are proving slow to embrace defence investment.
• If Europe is to control its destiny, and maintain control over strategic defence assets, then domestic investors need to step up and finance them.

The guns fell silent this day in 1918. The War to end all Wars. Who were we kidding?

This morning’s photo is Private William Patterson of the 1^st Battalion, The Cameronians / Scottish Rifles, shortly before he departed for the Western Front in 1915. He is my maternal grandfather.

He’d lied about his age. He was only 15 when he joined the Great Slaughter, signing up as a regular because it was easier to get in. His commanding officer tried to protect him by making him his Batman (servant). He was wounded at the Somme in 1916, promoted, and then badly gassed during the Battle of Ypres (Passchendaele) the following year. His battalion took part in the 1918 advance that forced the German capitulation. My Grandfather might have been on the banks of Sambre River, about to cross into Belgium when the guns finally stopped 108-years ago today.

After the war he served in Ireland before being medically discharged in the 1920s. His war-record helped him to secure a surface job at the local coal-mine at a time when work was scarce. He later moved to Glasgow. The gas left him permanently scarred and short of breath. I remember him as a very old man (he would have been in his 60s) who pulled me out of rockpools when I fell in! He smiled at lot but said little.

110 years ago, the Battle of the Somme was the bloodiest battle in the history of the British Army. From July to November some 420,000 British soldiers, many from “Pals” territorial battalions, were listed as killed, wounded or missing. 5 battalions of Cameronian territorial volunteers fought on the Somme. 1/Cameronians were a Battalion of Regulars, losing 20% of its strength (over 200 men killed), in the Battle for High Wood on a single day of the Battle; 20^thJuly 1916.

(The Cameronians should not be confused with The 79^th Cameron Highlanders – a kilted regiment in which my father’s uncles served during WW1 and his brother did his national service in the 1950s.)

Over 5 million British men up to the age of 51 joined or were conscripted between 1914 and 1919 – 25% of the UK’s male population. They were joined by over 1.4 million Indians and 1.3 million volunteers from Australia, Canada, South Africa and New Zealand.

Despite 4 hard years of war, by 1918 the British Army was the best trained and most capable force on the Western Front. It had perfected the coordination of tank, air support, and artillery attacks and trained the infantry to take the initiative and fight around barriers rather than through them. The last 100 days of the war saw the British Army break out the trenches and mount a series of stunning advances across Northern France in the first example of a coordinated Air/Land battlespace campaign. (It was a lesson not lost on German soldiers who went on to command all-arms Blitzkrieg assaults 22 years later.)

Today, Wes Streeting, the defence minister, believes the UK may be at war again in less than 1000 days.

Let’s pray it doesn’t happen. Many doubt today’s younger generation will rush to sign up for King and Country if the current Gray War with Russia turns kinetic.

National resilience will be one of the critical factors in determining its outcome. Other European nations, particularly the Scandinavians, have made national service a positive validation where those who are chosen to serve are regarded as the best of their cohorts. Recently there have been calls for national service to resume – to give NEETs (Not in Education, Employment or Training) a sense of purpose and direction.

However, modern armies are highly skilled, technically proficient, and professional. The British Army has little use for anyone that doesn’t understand or want to be there, but it would certainly welcome a larger, trained and proficient reserve to back up the regular forces in wartime. And, as Ukraine has shown, when faced by a ruthless invader, the people flock to the colours.

Equally important is making sure the defenders of Europe will have the weapons, equipment, logistical support, manufacturing capacity and ammunition to win any future war. That’s the purpose of Defence Funds, such as Spitfire Strategic Capital – who seek to finance defence to re-establish the strategic deterrence that will make Russia baulk at testing the resolve of Europe to defend itself.

But the world has changed.

Europe’s relationship with America is no longer based on trust and fidelity. While Donald Trump is supreme commander, there is little certainty America will honour its NATO commitment. We don’t yet know what the “deal” he thinks he’s doing with Putin to reset European security (and reward American firms with lucrative contracts) will look like, but it’s unlikely to find much support in Western Europe. That train has left the station.

The actions of Trump and Elon Musk, unilaterally switching off Ukraine’s access to Starlink, has sent European planners wargaming scenarios where the American’s don’t turn up and US weapons, including air defences, F-35 fighters, and artillery systems simply don’t work.

While the next US administration may be completely different, there are no guarantees for the future. It’s therefore vital that Europe rebuilds its own defence credentials and capabilities. American wants to go America First. That leaves Europe little choice but to do the same and to prioritise our own European MilTech – working closely with Canada, Australiasia, Japan and Korea, and other aligned powers.

Over the past year I’ve been speaking to Western investors about defence. I’ve been surprised at the low priority many put upon it. Many are still focused on ESG (Environmental, Social and Governance) issues – and are not sure where defence fits into that. Others don’t trust the complexity and risks of the defence markets, and prefer returns they can predict in areas like AI. Defence is important, but they don’t yet buy into it. In contrast – many US investors see it as fantastic new business and returns opportunity, and have piled in.

Total European NATO defence spending is over €640 bln per annum. About half of that is spent on personnel, operations, maintenance, and infrastructure. New equipment and R&D is over €165 bln. That’s a massive market with the potential to boost the European economy.  Whole new sectors are now opening up – Space is now recognised as vital strategic real estate, and Europe has a whole lot of catching up to do in terms of fielding satellite constellations and recon assets.

European orders for new equipment exceeds €70 bln per annum and are rising fast as Europe re-equips and rearms. In the past, up to half of that money was spent buying kit from the US. If that spending falls, it’s going to have an effect on US producers – about 12% of the development cost of the F-35 programme was paid by foreign buyers, who have gone on to place around 27% of total orders for the plane, substantially reducing the unit cost for the USAF. (Some of these orders have already been pulled.)

In the future, the volume of European spending with the US Military Industrial Complex of defence primes is set to tumble – with the effect of increasing costs to the US. That may explain why the bulk of new venture capital/private equity cash now being invested in European opportunities is US capital.

As I described yesterday in my note on Brexit, it’s the depth of US capital markets that’s been the major driver of US wealth. It gives US funds access to plentiful low-cost capital, which they are using to buy up cheap looking European Mil-Tech. According to Dealroom over $3.5 bln, or 47% of investments into non-listed European defence, has come from US investors in the past year! The figure may be higher – with funds channelled through European subsidiaries and linked firms.

US investor and prominent Neo-Libertarian, Peter Thiel is the best-known tech investor backing President Trump. Recently his “Founders Fund” has backed a notionally Dutch defence fund called Onodrim. In common with the other names in the Thiel ecosystem, it’s a name from Lord of the Rings – Elvish for “Ents”. With exception of a Swiss fund, all the investors are US tech funds. The founders of Onodrim are ex-Palantir. The new US semi-prime Anduril is already all across Europe buying up Mil-tech. Go figure.

More than a few Europeans are nervous that investors like Onodrim may prove to be a front for America to continue to dominate arms sales into Europe. Onodrim’s plan is to buy controlling stakes in European Miltech supply firms. It creates the potential for operational weakness in the event US/European relationships become further strained.

Since 1945 Europe has spent billions/trillions buying weapons systems built by the US military industrial complex. Sometimes corruption was involved, such as bribing European politicians to buy the F-104 Starfighter – a straight up rocket interceptor which flew like a brick when bombs were attached.

The only way Europe can avoid the risk of foreign defence interference – such as Elon Musk switching off mission-critical assets – is to build and control the systems, the assets, the means of production, the supply chains and the tech for ourselves. And that requires that Western investors get off the shelf, stop thinking the USA is going to bail them out, and get real about financing defence.

If Europe can show it is serious about defence, and recreates the level of strategic deterrence that stops future wars… then in a 100 or so years someone won’t be looking at faded photos of our grandkids in military fatigues and wondering about the wars they had to fight.

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

You can read a review on the Society of Professional Economist’s website here.