Tag: Nationalising British Steel

British Steel Takeover

On Saturday the Government took control of British Steel, although this is not a conventional nationalisation. See https://www.bbc.co.uk/news/articles/c230g09lvv9o for background. If you read the Act of Parliament that was passed you will see it is a quite short and remarkable Bill – see https://bills.parliament.uk/bills/3961 . It gives the Government powers to manage the company but not ownership.

It must surely lead to Government financial control and hence nationalisation in fairly short order. According to the current Chinese owners (Jingye) the company is losing £700,000 per day so the only way this business can be kept afloat is by massive Government subsidies out of your taxes.

With no UK supplies of coking coal required to operate a blast furnace (the Labour Government recently blocked opening of a mine to supply such coal), and no low-cost UK supplies of iron ore, it is difficult to see how a UK based steel business can ever compete on the world stage. It will always be uneconomic particularly when it has to adhere to the Government’s net-zero policy which is making UK electric power the most expensive in the world. Changing the Scunthorpe blast furnaces to electric arc ones will neither be economic nor produce good quality steel.

In reality the takeover of British Steel has been economic suicide with no sensible business plan in place.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Market Gyrations and Other News

It’s been a truly horrific last couple of weeks on the stock market. It’s taken a big dive then reversed direction just as quickly. It’s impossible to keep up with the tariff policy changes announced by Donald Trump.

Folks are still trying to figure out which companies are going to be affected when the target of the tough regulations appears to be mainly China. A good example of a company that is likely to be affected is 4imprint Group (FOUR). This is a UK FTSE company in which I have a holding. It sells promotional goods mainly in the USA but a major proportion of their products are made in China. Since the start of the year the share price has fallen about 35%. EPS forecasts have not fallen much but there is clearly uncertainty about the future business.

Will the company be able to replace Chinese imports by production in other countries such as the USA, the UK or other low tariff countries? There are plenty that could produce the products at low cost so I think the answer to that question is Yes.

It seems way too soon to me to jump to conclusions about what will happen even if there is some short-term disruption to supply chains.

FCA Consultation. The Financial Conduct Authority (FCA) have published a consultation of changes to the regulation of alternative fund managers (that includes those who manage VCTs for example). I have not had time to  read it yet but you may care to do so – see: https://www.fca.org.uk/publication/call-for-input/call-for-input-future-regulation-alternative-fund-managers.pdf

Nationalising British Steel. It looks like the Government may nationalise British Steel, or otherwise financially bail it out. This is very annoying and even the Reform Party is in favour of this stupidity. Unviable and declining industries should be allowed to go bust as they can never be rescued except at enormous cost – to be paid out of our taxes. A short-term bail-out never cures the problems in the long-term. The Labour Government seems not to have learned from their past experience of backing losing horses.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.