Prime Minister's statement yesterday  as to withdrawal from South [of]  Trondheim undoubtedly serious shock here and has created grave anxiety as to Government conduct of the war which will intensify when known that Namsos also evacuated. Government will be in difficult position in the debate next week and if there were any conceivable alternative the Government I believe might have been in danger.
As there is not and Winston Churchill  is primarily responsible and fully supporting the Prime Minister I do not anticipate any political crisis here.
Prime Minister saw High Commissioners last night  and I understand that the Dominions Office are sending report. 
In my view he underrates the repercussions of the forced abandonment of the Allies' efforts in Southern Norway and attaches too much importance to the possibilities with regard to Narvik.
While indicating my appreciation of the necessity of holding Narvik, particularly in view of the withdrawal from Southern Norway, I expressed the anxieties with regard to holding it and the doubts as to its effective closure vis-a-vis Gallivare iron ore fields set out in my telegram No. 284. 
The Prime Minister's reply did not remove these anxieties and doubts.
With regard to Italy, the Prime Minister considers it unlikely that Mussolini will take action in near future. This may be right but if it is in my view it will be due to Roosevelt's warning- information of this is most secret-rather than to the redisposition of the Allied naval forces or to any doubts by Mussolini as to the success of Hitler's Norwegian adventure.
At the end of the interview I put to the Prime Minister that Dominions had been subjected to a number of shocks culminating with Norwegian one, that it was inevitable they should be asking themselves how do United Kingdom Government visualise winning the war, and that I felt in fairness to them an appreciation should be prepared giving the views of the United Kingdom Government in broad outline, e.g. growth of air strength to the point of air supremacy, progressive effect of industrial blockade, increase in army and [further] additions to naval strength, and while this position developing capacity to resist attack on Western Front or against any vital point including air attack on United Kingdom.
The Prime Minister agreed something of the sort should be done and I am hopeful of having a finger in it as it would afford an opportunity of ensuring a complete survey of whole position.