Blain’s Morning Porridge Sept 18^th 2025 – Britain wields soft-power with skill and panache, but the world is changing fast.

 “War is a matter not so much of arms as of money..”

King Charles played a blinder in Windsor last night, making Trump feel regal. But the reality is Europe and the UK have difficult decisions to make. Do they remain aligned with a post-hegemonic USA slipping into autocratic polarisation, or do they seek closer Asian connections, including China? There are massive Economic and Geopolitical risks ahead.

Last night’s Windsor Castle State Dinner to honour President Trump was the UK exercising soft-power at the highest level. Surrounded by the wealthy and powerful from both sides of the pond, King Charles heaped praise upon the President, while gently chiding him on the environment and Ukraine, seeking to guide his thinking. He sought to remind Trump of an earlier, more heroic age of joint endeavour when the Allies made the world safe for democracy. Some folk will have found the flattery and sycophancy deeply distasteful – pragmatists know how Trump must be played.

The King demonstrated his enormous worth to his nation, playing a blinder despite the UK holding a pretty meagre hand. In the increasingly complex game of Geopolitics at this time of global-hegemonic change, this small, crowded and rather run-down nation at the unfashionable end of Europe has no option but to secure the best deals it can.

What will the UK’s future look like, and what will be the economic and market implications? To be blunt – future outcomes for  the UK and Europe will depend on whether we sink or swim in unpredictable, swirling geopolitical tides. Big decisions will need to be taken. They carry enormous risk.

One key decision point will be Ukraine.

The time to have stopped the War for Ukraine was over a decade ago with the proverbial big sick – dissuading Putin ever thinking 150 million dirt-poor, ignorant Russians could take-on the collective might of Nato and the economic strength of Europe and the USA, while offering the carrot their economic interests would be better served as a democracy aligned with Europe.

The opportunity to win a war was the moment Russia invaded, when the west should have swiftly committed unlimited arms and support to enable Ukraine to win a strategic victory, which would likely have triggered regime change in Moscow and stopped Russia becoming a satellite state of China.

Today, the outlook is very different. The USA has turned isolationist. As a result Nato is riven, and Europe is facing up to the reality that defence is a costly business. Nato is no longer the immovable rock that would have stopped the Russian steamroller. China has been the clear winner – Russia is now tied to it, gifting China the benefits of cheap Russian energy and resources, and Xi a stick to wield over Europe.

If you believe the legions of trollbots on X and other social media, Ukraine has been on the verge of falling to the mighty Red Army for the last 3 ½ years. But it hasn’t. Ukraine continues to fight back – effectively. With great courage and at enormous cost, they have fought the Ivans to a stalemate. Despite their bravery, Ukraine remain uncertain of what global support they can expect or receive.

The likelihood is the war remains stalemated as Europe dithers on how to pay for Ukraine to win – which it could. Not by reconquering territory, but by becoming Europe’s South Korea, bouyed by reconstruction and investment (and sanctioned Russian assets!) Will it happen? That would require enormous effort – which is possible, but also European commitment and unity, which is…. less possible.

Trump’s USA is unlikely to support anything more than a ceasefire on current front-lines, and will then walk away. President Trump said he was going to make peace in a single day, but he’s discovered that’s too difficult, and lost interest. Ukraine is not an American priority. Neither is Europe – and markets understand that.

The real question, perhaps, is to ask is should the USA remain a priority for Europe? It’s clear America is undergoing dramatic change. When the facts change, do you change your plans?

I’ve been in London the last few days, and there is growing disbelief but little real surprise in how Trump’s America seems to be devolving into autocracy and unravelling democratic free speech. The assassination of free-speech absolutist Charlie Kirk has become a perverse catalyst for a clampdown on any form of imagined dissent.

Pam Bondi, the most senior law officer in the USA has said: “There’s free speech and then there’s hate speech. We will absolutely target you, go after you, if you are targeting anyone with hate speech.” (Hate speech would appear to be anything that supports the Democrats). She then added ““[Employers] have to have an obligation to get rid of people. They need to look at people who are saying horrible things. And they shouldn’t be working with you.” She is sending the message voting Democrat might cost your job.

The President has echoed her sentiments. He immediately blamed the Radical Left for Kirk’s murder. He’s banned the Australians from his press corps for asking how much wealth he’s making from the Presidency. He’s delighted by the sacking of a talk-show host who suggested MAGA was taking advantage of the assassination. He told a troublesome journalist earlier this week: “She’ll probably go after people like you! Because you treat me so unfairly! You have a lot of hate in your hate. Maybe they’ll have to go after you.”

Despite the competitive eulogising of Charlie Kirk by senior MAGA figures, they seem to have forgotten what Kirk said about the fundamentals of free speech: “Hate speech does not exist legally in America. There’s ugly speech. There’s gross speech. There’s evil speech. And ALL of it is protected by the First Amendment.”

 For the record, the nonpartisan Centre of Strategic and International Studies has pointed out “Violent Far Right groups including militias, white supremacists, anti-government extremists and violent misogynists” have committed the most US Terrorist Attacks, adding “Anti-fascist extremists, anarchists and violent environmentalists have orchestrated a growing percentage of attacks.” Since 2020, there have been 81 terrror-attributed murders in the US. 44 of these were committed by right wing supporters, 18 by the left-wing, and 17 by Moslem extremists.  That does not count the Jan 6^th Insurgency by the Hard-Right who stormed the Capitol. One rioter died, but does figure in the count because she was the aggressor, while 5 law enforcement officers who subsequently died from heart-attack or suicide aren’t counted either.

As America changes and drifts away, what should Europe do? The best and easy option is to hope America stabilises. That may be why so many titans of industry want to strike deals. But, the reality is the bulk of the World’s wealthiest consumers and the fastest growing middle class are now in South East Asia – not just China, but India, the newly emerged economies, and also Japan, Korea and even Oz. These are the nations that will set future growth. They are the future market.

Should Europe now be reaching out to Indian and China for engagement? The offer of access to a market of 900 million relatively wealthy Europeans, and the ability to trade in Tech from Airliners, MedTech, Pharma, and the future of computing should be more appealing to India and China’s mercantilist outlook than selling to relatively poor Russia. China has invested billions in growing global supply and trade infrastructure; the belt and road and new silk roads.

China may shortly be surpassed by Indian in terms of wealth, but it will be the regional (if not global) military hegemon. China may decide it wishes to flex these muscles by maintaining its absolute support for Russia (and access to the mineral wealth of Siberia) by raising the threat level directed at Europe. China may opt to dominate the competitive economies of South East Asia through proxy conflict in Europe. I consider that unlikely – thinking they will prefer trade – but folk with better knowledge than I of the mindset within the Chinese Communist Party (CCP) think maybe not.

If Europe were braver, more connected and more aligned, then it would be a simple thing to coordinate the repulse of Russia from Ukraine and massive defence spending. It would give Europe power to flex its own military chops – the best way to avoid conflict – and demonstrate to China its willingness to defend itself, likely persuading the CCP that Trade rather the conflict is a better long-term goal.

But Europe remains greatly divided, unable to agree much or anything swiftly. A common commitment to defence would pay enormous multiplier dividends, and anyone who invested in European Defence Stocks in the last year has seen them pay off. Unless we see that commitment – through unity and a European commitment to Ukraine – then Europe is going to remain caught between the Devil and the Deep Blue Sea.

The big question is which is China and which is America?

Out of time, and back to the day job..

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital