British Steel has collapsed into insolvency, putting up to 25,000 jobs at risk.
The owners of the UK's second-biggest steel maker had been lobbying the Government for £30m in financial support to help them to address “Brexit-related issues” affecting the business.
The Independent says “crunch talks” were held with Business Secretary Greg Clark yesterday, but no rescue deal materialised.
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“Negotiations ground to a halt because ministers felt that the financial assistance would breach EU state aid rules that bar most subsidies, according to people with knowledge of the matter,” reports the Financial Times.
Last September, British Steel cut almost 10% of its workforce, blaming the weakening in the pound caused by Brexit.
Then, last month, the company borrowed £120m from the government to enable it to pay an EU carbon bill, so it could avoid a steep fine. The Daily Telegraph says: “Questions have been asked why British Steel was rescued just three weeks ago when officials must have known the depth of its troubles.”
Other problems include a slump in orders from European customers due to uncertainty over the Brexit process, and the escalating US-China trade war sending prices soaring for the raw commodities needed to make steel, which are traded in dollars.
The Guardian’s Nils Pratley invites readers to “choose your villain” in the crisis. He argues that: “the Government has dithered for years about the future of steelmaking,” and adds that the “unresolved Brexit pantomime in Westminster” hasn’t helped.
He also points out that “the company’s private equity owner, Greybull Capital” has a string of “past calamities” including the collapse of Monarch Airlines and electricals chain Comet.
The crisis has drawn attention to the wider state of the UK steel industry.
Sky News points out the surprising fact that “in the past two years (to be precise, the past 22 months) China has manufactured more steel than Britain has since the height of the Industrial Revolution in 1870”.