British Steel collapses putting 25,000 jobs at risk
The UK’s second largest steel producer collapsed into insolvency after it failed to secure emergency funding from the government putting thousands of jobs at risk.
British Steel went into administration on Wednesday, putting 5,000 direct jobs at risk and endangered another 20,000 in the supply chain.
The steel producer collapsed after it failed to secure emergency funding after rescue talks held between the UK government and the company’s owner Greybull Capital broke down.
Hunt for British Steel buyer begins
The Government’s Official Receiver, which will handle the liquidation process of British Steel, has taken control of the company and the hunt for a suitable buyer to acquire the steel producer has begun.
Despite the government being open to new buyers, the opposition Labour Party has called for British Steel to be brought under public ownership and renationalised.
For the time being, the company will continue to trade as normal and staff will remain employed by British Steel, with the majority based in Scunthorpe.
Greybull Capital fail to save British Steel
British Steel’s owner Greybull Capital specialises in turning around distressed businesses, but was forced to admit defeat on this occasion, blaming its failure on the challenges created by Brexit.
The investment company famously acquired British Steel from its previous owner Tata Steel for just £1 three years ago.
Greybull Capital was able to generate a profit at the ailing steel producer in 2017 but was forced to cut 400 jobs last year in a bid to save the company as it struggled to deal with a weakening pound and increased Brexit uncertainty that hurt demand.
‘In light of events over the past few weeks, it is clear Greybull needs to do the right thing by getting out of the road and let those who are committed to our industry work to save the business,’ the union Community said in a statement.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets