British Steel: does the rescue make sense?
The British parliament on Sunday passed emergency legislation paving the way for manufacturer British Steel to be rescued after its Chinese operator Jingye announced plans to shut down the Scunthorpe steelworks, the only plant in the country that not only recycles steel but can produce it from ore and coke. While Jingye formally remains the owner, the state will take control in a move that will incur enormous losses. Controversy in the press.
A matter of national security
London has no other choice, The Observer concludes:
“There would be significant risks if UK industry were to become wholly reliant on steel imports, in a world characterised by increasing instability and the trade protectionism of Donald Trump's White House. Europe may be considered a reliable trading partner, but the steel tariffs imposed by the US, combined with pressures for increased defence capability as the US goes cold on Nato, means the UK may not be able to count on sufficient supply from our European allies. ... To let the furnaces in Scunthorpe go out would have put Britain's security at risk.”
Dependencies persist
Security concerns should not be used to justify a rushed nationalisation of the steel industry, The Economist counters:
“If subsidising steel is, in effect, defence spending, it is worth asking if this is indeed the most significant potential bottleneck that merits devoting large sums that might otherwise go on other pressing military priorities. Britain's steelworks are anyway not entirely self-sufficient. They rely on imports of coal and iron ore from countries like Australia, Brazil, South Africa and Sweden. Nor were they self-sufficient in times of war. ... The economic case for intervention also warrants scrutiny.”