Two defence ministers resigned on Thursday — John Healey as Defence Secretary and Al Carns as Armed Forces Minister — over the government’s defence investment plan. Healey’s departure is the more politically damaging, but Carns’s resignation letter was the more pointed. He argued the plan is still buying for the last war rather than the next one, and called explicitly for a higher share of spending on uncrewed systems, AI and data. The resignations pile further pressure on Starmer’s leadership at a moment when the government’s credibility on defence spending — already strained after the row over the welfare bill — is being questioned by its own people.

The UK economy contracted in April, with the ONS citing the impact of the Iran conflict on business activity. The data lands at an awkward moment: the Bank is trying to calibrate the pace of rate cuts against sticky services inflation, and a geopolitically-driven supply shock complicates that picture considerably.

On the Iran conflict itself, Trump said on Thursday that a “great settlement” to end the war was close. Tehran pushed back immediately, calling reports of any deal “speculative” and saying nothing has been finalised. The gap between those two positions is wide enough that markets should treat the Trump claim with caution for now. Separately, a US strike on an oil tanker off Oman killed at least one Indian sailor, a reminder that the conflict is still producing live incidents even as diplomacy is reportedly under way.

SpaceX priced its IPO at $135 a share, raising $75bn in what is being reported as the largest public offering on record. The deal drew blockbuster demand. At that valuation Musk would become the world’s first trillionaire on paper. For anyone with exposure to the aerospace, satellite or defence technology supply chain, the listing sets a new benchmark for how markets are pricing physical-world AI and launch infrastructure.

Jeff Bezos’s physical AI startup Prometheus raised $12bn at a $41bn valuation. The company is positioning itself as an “artificial general engineer” for heavy engineering and drug design — a direct play on automating capital-intensive industries. The round size and valuation suggest serious institutional conviction that physical-world AI is the next leg of the current investment cycle.

UK GDP data for May publishes next week. Watch also for any further Cabinet movement over the weekend given the political pressure now visible at the top of the Labour government.

Sources

The Economist, Guardian, BBC News, Al Jazeera, FT, Politico, TechCrunch, Ars Technica — 2026-06-12