The Observer view on British Steel: saved for now, but for how long? | Observer editorial

R.The last furnaces in the UK were shattered on the closure brinking last week. It was found that Jinji, the Chinese owner of Scunthorpe British Steel, was ready to refuse to buy more Cook Coat and Iron Raw supply required To keep them runningAt this point, it could not be restarted; Effectively, a unilateral decision to put an end to Britain’s ability Basic steel production. In these circumstances, the government had no choice but to remember Parliament for an emergency to pass legislation to give business minister Jonathan Reynolds power Direct British steel.

The United Kingdom started from a Decreased steel production baseIt produced only 7.2 million tons in 2021, compared to 13.9 million tons in France, 24.4 million tons in Italy and 40.1 million tons in Germany. If British Steel closes its ovens, this will leave the United Kingdom as the only G7 nation without the initial ability to make steel, with great economic and security consequences. A group of industries depends on steel: construction, defense, transportation, and green energy. Without the British producing steel, the global giant ArcelleMittal will achieve what Defense Thinktank Rusi described as a “virtual monopoly” in the production of structural steel construction frames UK market. Railways sources network about 95 % of its path From Scunthorpe. Parts of the defense industry depend greatly on the British steel producing; 90 % of the steel used in Queen Elizabeth aircraft carrier is produced by Tata Steel in Port Talbot, for example.

There will be great risks if the UK industry becomes fully dependent on steel imports, in a world characterized by increased instability and commercial protection for the White House in Donald Trump. Europe may consider a reliable commercial partner, but the solid definitions imposed by the United States, as well as pressure to increase the ability of defense as the United States over NATO, means that the UK may not be able to rely on adequate supply from our European allies.

So the government had to interfere in this way: to let the ovens in Scunthorpe come out not only the loss of thousands of jobs, which affects society, but to put Britain’s security at risk. The ability to guide British steel Do not rise to the level of nationalization, but it seems that this is all the result, but it is certain, given the situation with Jingye. It may end at the cost of British taxpayer dear, but the risk of not maintaining local basic steel production will be more expensive.

It is far from this that the ministers find themselves in this position, and governments of both colors over decades bear responsibility. The history of the British steel industry was from the crisis to the crisis: Scunthorpe was sold by Tata Steel to the Greybull Capital in 2016, which was left after only three years. The only buyer on the market was Jenny, who saw Boris Johnson, then Prime Minister, a more acceptable option than closing or nationalization. No long -term strategic government has specified to maintain the initial British steel -making capacity, including realistic carbon removal plans, given that it is a huge pollutant. While steel producers in France and Germany were relatively protected from wholesale energy costs through government intervention, UK producers pay up to 50 % against electricity, and huge input costs in steel making, from their crucifixion Competitors from these countries; Conservative business secretaries did not address this asymmetry. The last government could have done more to increase the low -carbon steel market Through the organization. It is an aspect of the common aspect of British industrial policy: the lack of a long -term strategy to care for British competitive companies and remove barriers in front of their growth.

There is a risk that without a broader British steel strategy, the government gives Scunthorpe in a way that would drain billions of taxpayer boxes but are not part of a sustainable strategy for the future of basic steel making in the United Kingdom. This should be priority by avoiding the immediate crisis. But the Minister of Business needs to learn the broader lessons of this unfortunate epic of industrial policy in all fields. The UK is in an economically unstable position: long -term structural issues including low productivity growth, commercial investment and stagnant living standards in the epidemic, by the energy crisis and by global instability created by Trump’s identification policy. Britain’s long -term growth capabilities have been damaged by Britain’s exit from the European Union and the installation of important commercial barriers with the largest and nearest commercial bloc.

We live in a world where Britain is declining an economic and diplomatic agency. It is more important than ever to reduce our dependence on other countries, including China, to produce strategic importance. The government deserves to be praised to take quick measures to prevent its initial steel making ability. But this is the easy thing: the most difficult question is whether it is possible to improve the competitiveness of the British steel in the medium term, while removing carbon, in a way that guarantees the future of the UK steel industry without ever relying on huge subsidies from the taxpayer.

Do you have an opinion on the issues raised in this article? If you want to provide a letter of up to 250 words for publication, send them to us by email Observer.Ltters@obsever.co.uk