British Steel's Financial Woes: Insights into the Factors Behind the Company's Struggles
In a bid to safeguard the domestic steel industry and secure the future of the last national producer of virgin steel, British Steel, the UK government has unveiled a comprehensive plan to strengthen the sector.
The strategy, which includes direct ownership intervention, stronger trade protections, and a forthcoming Steel Strategy aligned with national security and industrial growth objectives, was announced following the government's takeover of British Steel in April 2025. The move was necessary after the company's Chinese owner planned to shut down its blast furnaces in Scunthorpe, putting hundreds of jobs at risk and threatening the future of steel production in the UK.
The government's efforts to protect UK steel producers extend to enhancing steel safeguard measures, which better shield domestic producers from surges in cheap imports. These measures are part of a broader Industrial and Trade Strategy aimed at supporting steel production and the thousands of families dependent on the industry.
A detailed Steel Strategy is expected later this year, focusing on building a stronger and more competitive UK steel sector. The government has also launched a Call for Evidence to gather industry views on future trade approaches for steel post-June 2026, demonstrating a commitment to evolving trade protections based on industry needs.
Despite a trade deal with the US reducing tariffs on UK steel exports, British Steel and the wider UK steel sector continue to face uncertainty around ongoing levies that affect competitiveness in key markets like the US. The government is actively working to resolve these issues.
Recent analyses suggest there may be efforts to reposition British Steel’s Scunthorpe operations strategically, potentially shifting from traditional steelmaking to more sustainable methods to ensure economic viability and align with net-zero goals.
British Steel's Scunthorpe plant, which employs about 2,700 people, or three quarters of the company's entire workforce, has been losing £700,000 a day, despite £1.2 billion of investment. The news has caused a stir in government, with ministers currently working on plans to save the business.
The UK steel industry, comprising over 1,100 businesses and supporting 40,000 other firms across the country, contributes significantly to the economy, with a reported £2.3 billion contribution in 2023.
In a recent development, Prime Minister Keir Starmer announced plans to fast-track a law through parliament which would give the government the power to assume control of some of the site's operations. Ministers have been temporarily called back from their Easter break to help save the national landmark.
However, not all news is related to British Steel. A nursery development is set to open in Somerset, while plans for a retirement complex and GP practice have been rejected in Surrey.
References: [1] GOV.UK (2023). UK Steel Strategy: Building a world-class industry. [online] Available at: https://www.gov.uk/government/publications/uk-steel-strategy-building-a-world-class-industry/uk-steel-strategy-building-a-world-class-industry [2] GOV.UK (2025). UK Government takes ownership of British Steel. [online] Available at: https://www.gov.uk/government/news/uk-government-takes-ownership-of-british-steel [3] GOV.UK (2025). UK Government unveils enhanced steel safeguard measures. [online] Available at: https://www.gov.uk/government/news/uk-government-unveils-enhanced-steel-safeguard-measures [4] Financial Times (2025). British Steel eyes green transition as it grapples with losses. [online] Available at: https://www.ft.com/content/9215096a-8b4b-4114-a506-7e4581834b7a
The government's comprehensive plan to strengthen the domestic steel industry involves direct ownership intervention, stronger trade protections, and a forthcoming Steel Strategy aligned with national security and industrial growth objectives, all of which are part of the broader Industrial and Trade Strategy aimed at supporting not only steel production but also the thousands of families dependent on the business sector. The strategy is expected to include diverse aspects of finance, as the government has launched a Call for Evidence to gather industry views on future trade approaches for steel post-June 2026, demonstrating a commitment to evolving trade protections based on industry needs.
