Dreary pessimist knew battle is lost (3,7)
I believe the answer is:
wet blanket
'dreary pessimist' is the definition.
'knew battle is lost' is the wordplay.
'is lost' is an anagram indicator.
'knew'+'battle'='knewbattle'
'knewbattle' is an anagram of 'WET BLANKET'.
(Other definitions for wet blanket that I've seen before include "what could moisten kippers" , "misery" , "Depressing non-participant - soggy covering" , "Spoilsport" , "Killjoy" .)