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Parliament passed emergency legislation giving the Business Secretary sweeping powers to intervene in UK steel production. The powers are intended to be used to keep two blast furnaces in Scunthorpe open and operational, against the wishes of their Chinese owner. Government ministers have suggested that full nationalisation may follow.
Rolling back the frontiers of private ownership
The government has suspended import tariffs on 89 products in order to help businesses cope with the imposition of tariffs on exports to the US. If the UK were still a member of the EU, this move would be impossible, and any alteration in UK import duties could only come about with the consent of the other member states, the EU parliament, and the EU Commission.
Steve Witkoff, the US Special Envoy to the Middle East met Vladimir Putin in St Petersburg over the weekend for talks aimed at a ceasefire agreement in Ukraine. They were the highest-level talks between US and Russian officials since the war started.
Dealing with the devil.
Donald Trump has backed down from the wide-ranging imposition of tariffs he announced last week, and will, for now, impose a blanket 10% ban on all imports. Only China will face more punitive tariffs. Most commentators attribute the volte face to the chaos that the announcement of tariffs caused in stock and bond markets.
The government has banned travelers from Europe bringing meat and dairy products into the UK in order to prevent new cases of foot-and-mouth disease, which is spreading quickly across the continent. Were it not for Brexit, such a ban would be subject to review by the ECJ and the government would be unable to take decisive unilateral action to protect public health.
Media
Briefings co-editor Robert Tombs on UK steel
John Rapley on China’s readiness for war
Blog
During 2024, a widely-held view emerged that Brexit has damaged UK trade by around 15%. The new trade data tells a different tale. Building on previous BfB articles by Catherine McBride and Harry Western, this article provides a sector-by-sector analysis of the trade numbers for 2024 shows the biggest hits to UK exports are in industries that are in chronic decline, or in global difficulties, or where re-exports cloud the numbers. At a push, Brexit might just account for £6 billion of the £26 billion shortfall in exports to the EU since 2019. The bigger issue is what’s behind the other £20 billion.
One big question remains: if Brexit is not principally to blame, then why exactly have UK exports underperformed other countries since 2019. There are three reasons. First, because UK exports to the EU already underperformed other countries during the two decades prior to Brexit. Second, because automotive and aerospace delivered a higher proportion of UK exports in 2019 than for any other G7 country, and they were the worst-hit global manufacturing industries during the 2020 to 2023 period.The third reason is that the industries that did well in 2020 to 2023 were the sectors in which the UK is weak, specifically energy and pharmaceuticals.
Key Points
The government is right to intervene to prevent the closure of the steel works in Scunthorpe. Though domestic production may be more expensive than imports, it would be foolish to rely completely on other countries for a supply of a critical strategic resource. The steel crisis should also prompt a reevaluation of the role that Chinese companies play in the UK economy. How is it that the decision to close the only steelworks capable of producing steel from iron ore in the UK should fall to a member of the Chinese Communist Party?
UK steel production is not a thriving industry, especially after the imposition of tariffs on steel by Donald Trump. The Scunthorpe steelworks are reportedly losing £700,000 per day. But Scunthorpe is the last place in the UK capable of producing the high-grade steel required for, among other things, submarines, aircraft engines, and nuclear reactors. Letting the plant close would leave the UK unnecessarily vulnerable in an increasingly volatile world.
The emergency legislation gives the government the power to order the owners of the steelworks to continue production. This is a last resort after repeated (and reportedly very generous) offers for government grants and subsidies were refused by the Chinese owners of the plant. It is perhaps ironic that a country founded on free market principles should turn to muscular state intervention to deal with recalcitrant communists, but it shows how foolish it was of successive governments to allow critical infrastructure to fall into the hands of our strategic enemies.
The CEO of the company that owns British Steel is not only a member of the CCP, but held several official positions in local and national government before going into business. Government officials bewildered by his lack of interest in generous subsidies should remember who they are dealing with. When push comes to shove, loyalty to the Party will win out over the profit motive. Undermining the UK’s ability to produce submarines and nuclear reactors would be an obvious strategic victory as China tries to be a more assertive naval power.
Steel is not the only UK industry in which Chinese companies now play a central role. The government should remember the difficulties this caused at Scunthorpe and reevaluate Chinese involvement in the UK economy more widely.
