Jacob Rees-Mogg opens talks with steel giants including British Steel and Tata after job cuts moratorium

Published

3 years ago

October 17, 2022

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Jacob Rees-Mogg, the business secretary, has opened formal talks with Britain’s second-biggest steel producer about a taxpayer bailout amid fears for thousands of industrial jobs.

Sky News has learnt that Mr Rees-Mogg wrote to Jingye Group, the owner of British Steel, last week, to express a willingness to negotiate over the Chinese company’s request.

A source close to the discussions said British Steel had agreed to maintain its current operations and workforce while talks with ministers were ongoing.

Earlier this month, Sky News revealed that Jingye, which bought British Steel out of insolvency in 2020, had told the government that its two blast furnaces at its Scunthorpe steelworks were unlikely to be viable without government aid.

Subsequent reports indicated that the level of support required by Jingye was likely to be in the order of £500m.

Tata Steel, meanwhile, which is the biggest player in the UK steel sector, has also requested financial help from the government.

A Whitehall insider said on Monday that talks were “underway with the steel sector, including British Steel and Tata, to secure the sector’s long-term future”.

British Steel employs about 4,000 people, with thousands more jobs in its supply chain dependent upon the company.

‘We recognise businesses feeling energy price impact’

The Department for Business, Energy and Industrial Strategy (BEIS) declined to comment on the content of Mr Rees-Mogg’s letter, although a spokesman said: “We are working across the steel sector on achieving their sustainable and competitive long-term future.

“We recognise that businesses are feeling the impact of high global energy prices, particularly steel producers, which is why we announced the Energy Bill Relief Scheme to bring down costs.

“This is in addition to extensive support we have provided to the steel sector as a whole to help with energy costs, worth more than £780m since 2013.”

Jingye is said to be prepared to make thousands of people redundant if ministers reject its request for financial support.

It would then plan to import steel from China to roll at British Steel’s UK sites, according to the insider.

Industrial consumers of energy have complained for months that soaring prices are imperilling their ability to continue operating.

Politically unpalatable menu of options for Rees-Mogg

For Mr Rees-Mogg, who took over as business secretary just weeks ago, the question of government support for a Chinese-owned company presents a politically unpalatable menu of options.

If no state funding is made available and significant numbers of jobs are axed, it would undermine a key tenet of the ‘levelling-up’ strategy that became a doctrine of Boris Johnson’s administration.

An agreement to provide substantial taxpayer funding to a Chinese-owned business, however, would almost certainly provoke outrage among Tory critics of Beijing.

China’s role in global steel production, after years of international trade rows about dumping, would make any subsidies even more contentious.

A British Steel spokesman said two weeks ago: “We are investing hundreds of millions of pounds in our long-term future but like most other companies we are facing a significant challenge because of the economic slowdown, surging inflation and exceptionally high energy and carbon prices.

“We welcome the recent announcement by the UK government to reduce energy costs for businesses and remain in dialogue with officials to ensure we compete on a level playing field with our global competitors.”

How British Steel ended up needing support

In May 2019, the Official Receiver was appointed to take control of the company after negotiations over an emergency £30m government loan fell apart.

British Steel had been formed in 2016 when India’s Tata Steel sold the business for £1 to Greybull Capital, an investment firm.

As part of the deal that secured ownership of British Steel for Jingye, the Chinese group said it would invest £1.2bn in modernising the business during the following decade.

Jingye’s purchase of the company, which completed in the spring of 2020, was hailed by Mr Johnson as assuring the long-term future of steel production in Britain’s industrial heartlands.

“The sounds of these steelworks have long echoed throughout Yorkshire and Humber and the North East,” he said.

“Today, as British Steel takes its next steps under Jingye’s leadership, we can be sure these will ring out for decades to come.”

Liberty Steel, the third-biggest player in the industry, saw a bid for £170m in state aid rejected last year by Kwasi Kwarteng, the then business secretary and the now former chancellor.

Business

Microsoft is now worth over $4 trn, becoming only second firm ever to pass milestone

Published

32 mins ago

July 31, 2025

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Microsoft has become only the second publicly traded company after Nvidia to surpass $4 trn (£3.03trn) in market valuation, after registering huge earnings.

On Thursday, shares rose on Wall Street with the S&P 500 and Nasdaq climbing to new record highs.

Stocks in Microsoft jumped after posting better-than-expected results, helped by its Azure cloud computing platform, which is a centrepiece of the company’s artificial intelligence (AI) efforts.

Shares in Facebook and Instagram’s parent company, Meta, also surged after beating sales and profit targets.

Technology giants Apple and Amazon will report their results after Wall Street’s close.

Microsoft first cracked the $1trn (£760bn) mark in April 2019, but its move to $3trn (£2.27trn) took longer than technology giants Nvidia and Apple.

Nvidia tripled its value in just about a year and clinched the $4trn milestone before any other company on 9 July. Apple was last valued at $3.12trn.

In comparison, the biggest UK company by market value is drug manufacturer AstraZeneca, worth $235.97bn (£178.55bn).

Companies ranked by market value (USD), according to tradingview.com

1. Nvidia (US) $4.43trn
2. Microsoft (US) $4trn
3. Apple (US) $3.12trn
4. Amazon (US) $2.47trn
5. Alphabet (US) $2.35trn
6. Meta (US) $1.95trn
7. Saudi Arabian Oil (Saudi Arabia) $1.56trn
8. Broadcom (US) $1.42trn
9. Berkshire Hathaway (US) $1.03trn
10. Tesla (US) $1.02trn
11. Taiwan Semiconductor Manufacturing (Taiwan) $1trn
29. Samsung Electronics (South Korea) $338.06bn
36. Alibaba (China) $284.62bn
52. AstraZeneca (UK) $235.97bn

While sweeping US tariffs had investors worried about tighter business spending, Microsoft’s strong earnings have shown that the company’s books are yet to take a hit.

Microsoft’s multibillion-dollar bet on OpenAI is proving to be a game changer, powering its Office Suite and Azure offerings with cutting-edge AI and fueling the stock to more than double its value since ChatGPT’s late-2022 debut.

On Wednesday, the firm announced Azure sales surpassed $75bn (£56bn) on an annual basis, while Azure revenue jumped 39% in the April-June quarter.

Overall revenue rose 18% to $76.4bn (£57.81bn) over the same period.

It is also forecasting a record $30bn (£22.7bn) in capital spending over the first quarter to meet soaring AI demand..

Business

Christmas food price shock looms, chancellor warned

Published

15 hours ago

July 31, 2025

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Christmas food price shock looms, chancellor warned

Food inflation will rise to 6% by the end of the year – posing a “significant challenge” to household budgets in the run-up to Christmas, industry leaders have predicted.

The British Retail Consortium is warning that the chancellor risks “fanning the flames of inflation” if she hikes taxes in the coming budget.

Despite intense price competition between supermarket chains, the BRC has sounded the alarm over the pace of grocery price hikes.

As of this month, food inflation has risen 4% year on year – its highest level since February 2024.

The BRC said this increase is linked to global factors, such as high demand and crop struggles.

Beef, chicken and tea prices are among those that have risen the most this year – but some of the blame is being laid squarely at the chancellor’s door too.

The BRC said it was inevitable that a £7bn burden, through changes to employers’ national insurance contributions and minimum pay rules after last October’s budget, had been partly passed on to customers in the form of higher prices.

It published the results of a survey of retail industry finance chiefs to illustrate its point – that nerves about what Ms Reeves’s second budget could bring were not helping companies invest in either new employment or prices.

Business was promised it would be spared additional pain after it was put on the hook for the bulk of the chancellor’s tax-raising measures last year.

However, speculation is now rife over who will feel the pain this autumn as she juggles a deterioration in the public finances.

A widening black hole is estimated at around £20bn.

The cost of servicing government debt has risen since the last budget, while U-turns on welfare reforms and winter fuel payment cuts have made her job even harder – making further tax-raising measures inevitable.

The survey of chief financial officers for the BRC showed the biggest current fear ahead was for the “tax and regulatory burden”.

Two-thirds of the CFOs predicted further price rises in the coming year, at a time when the headline rate inflation already remains stuck way above the Bank of England’s target of 2%.

It currently stands at 3.6%.

Helen Dickinson, chief executive of the BRC, said: “Retail was squarely in the firing line of the last budget, with the industry hit by £7bn in new costs and taxes.

“Retailers have done everything they can to shield their customers from higher costs, but given their slim margins and the rising cost of employing staff, price rises were inevitable.

“The consequences are now being felt by households as many struggle to cope with the rising cost of their weekly shop.

“It is up to the chancellor to decide whether to fan the flames of inflation, or to support the everyday economy by backing the high street and the local jobs they provide.”

She concluded: “Retail accounts for 5% of the economy yet currently pays 7.4% of business taxes and a whopping 21% of all business rates.

“It is vital the upcoming reforms offer a meaningful reduction in retailers’ rates bill, and ensures no store pays more as a result of the changes.”

The Treasury has been approached for comment.

Business

US Federal Reserve defies calls from Donald Trump to cut interest rate

Published

1 day ago

July 30, 2025

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US Federal Reserve defies calls from Donald Trump to cut interest rate

The Federal Reserve has defied calls from US President Donald Trump for a cut to the interest rate by leaving it unchanged.

The decision means it has an effective rate of 4.3%, where it has remained after the central bank, known as the Fed, reduced it three times last year.

“We’re keeping the rates high, and it’s hurting people from buying houses,” Mr Trump told reporters. “All because of the Fed.”

Money latest: Three major broadband firms hike prices

Mr Trump has repeatedly been asked whether he would fire Fed chair Jerome Powell if he failed to heed his demand to cut the rate.

In June, the US president labelled Mr Powell a “stupid person” after the Fed decided not to change rates. Then less than two weeks later, in a further attack, he said the Fed’s chair should “ashamed” and would “love” him to resign.

The US president has spent months verbally attacking Mr Powell.

There were clear tensions between the pair last Thursday as they toured the Federal Reserve in Washington DC, which is undergoing renovations.

When taking questions, Mr Trump said: “I’d love him to lower interest rates,” then laughed and slapped Powell’s arm.

The US president also challenged him, in front of reporters, about an alleged overspend on the renovations and produced paperwork to prove his point. Mr Powell shook his head as Trump made the claim.

When Mr Trump was asked what he would do as a real estate mogul if this happened to one of his projects, he said he’d fire his project manager – seemingly in reference to Mr Powell.

Unlike the UK, the US interest rate is a range to guide lenders rather than a single percentage.

The Fed has expressed concern about the impact of Mr Trump’s signature economic policy of implementing new tariffs, taxes on imports to the US.

On Wednesday, the president said he was still negotiating with India on trade after announcing the US will impose a 25% tariff on goods imported from the country from Friday.

Mr Trump also signed an executive order on Wednesday implementing an additional 40% tariff on Brazil, bringing the total tariff amount to 50%, excluding certain products, including oil and precious metals.

The committee which sets rates voted 9 to 2 to keep the benchmark rate steady, the two dissenters were appointees of President Trump who believe monetary policy is too tight.

In a policy statement to explain their decision, the Federal Reserve said that “uncertainty about the economic outlook remains elevated” but growth “moderated in the first half of the year,” possibly bolstering the case to lower rates at a future meeting.

Nathan Thooft, chief investment officer at Manulife Investment Management, described the rate decision as a “kind of a nothing burger” and it was “widely expected”.

Tony Welch, chief investment officer at SignatureFD, agreed that it was “broadly as expected”. He added: “That explains why you’re not seeing a lot of movement in the market right now because there’s nothing that’s surprising.”