Jacob Rees-Mogg opens talks with steel giants including British Steel and Tata after job cuts moratorium
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.
The Scunthorpe plant was previously owned by Tata
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
US trade war: The state of play as Trump signs order imposing new tariffs – but there are more delays
Donald Trump’s trade war has been difficult to keep up with, to put it mildly.
For all the threats and bluster of the US election campaign last year to the on-off implementation of trade tariffs – and more threats – since he returned to the White House in January, the president‘s protectionist agenda has been haphazard.
Trading partners, export-focused firms, customs agents and even his own trade team have had a lot on their plates as deadlines were imposed – and then retracted – and the tariff numbers tinkered.
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While the UK was the first country to secure a truce of sorts, described as a “deal”, the vast majority of nations have failed to secure any agreement.
Deal or no deal, no country is on better trading terms with the United States than it was when Trump 2.0 began.
Here, we examine what nations and blocs are on the hook for, and the potential consequences, as Mr Trump’s suspended “reciprocal” tariffs prepare to take effect. That will now not happen until 7 August.
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What does the UK-US trade deal involve?
Why was 1 August such an important date?
To understand the present day, we must first wind the clock back to early April.
Then, Mr Trump proudly showed off a board in the White House Rose Garden containing a list of countries and the tariffs they would immediately face in retaliation for the rates they impose on US-made goods. He called it “liberation day”.
The tariff numbers were big and financial markets took fright.
Just days later, the president announced a 90-day pause in those rates for all countries except China, to allow for negotiations.
The initial deadline of 9 July was then extended again to 1 August. Late on 31 July, Mr Trump signed the executive order but said that the tariff rates would not kick in for seven additional days to allow for the orders to be fully communicated.
Since April, only eight countries or trading blocs have agreed “deals” to limit the reciprocal tariffs and – in some cases – sectoral tariffs already in place.
Who has agreed a deal over the past 120 days?
The UK, Japan, Indonesia, the European Union and South Korea are among the eight to be facing lower rates than had been threatened back in April.
China has not really done a deal but it is no longer facing punitive tariffs above 100%.
Its decision to retaliate against US levies prompted a truce level to be agreed between the pair, pending further talks.
There’s a backlash against the EU over its deal, with many national leaders accusing the European Commission of giving in too easily. A broad 15% rate is to apply, down from the threatened 30%, while the bloc has also committed to US investment and to pay for US-produced natural gas.
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Millions of EU jobs were in firing line
Where does the UK stand?
We’ve already mentioned that the UK was the first to avert the worst of what was threatened.
While a 10% baseline tariff covers the vast majority of the goods we send to the US, aerospace products are exempt.
Our steel sector has not been subjected to Trump’s 50% tariffs and has been facing down a 25% rate. The government announced on Thursday that it would not apply under the terms of a quota system.
UK car exports were on a 25% rate until the end of June when the deal agreed in May took that down to 10% under a similar quota arrangement that exempts the first 100,000 cars from a levy.
Who has not done a deal?
Canada is among the big names facing a 35% baseline tariff rate. That is up from 25% and covers all goods not subject to a US-Mexico-Canada trade agreement that involves rules of origin.
America is its biggest export market and it has long been in Trump’s sights.
Mexico, another country deeply ingrained in the US supply chain, is facing a 30% rate but has been given an extra 90 days to secure a deal.
Brazil is facing a 50% rate. For India, it’s 25%.
What are the consequences?
This is where it all gets a bit woolly – for good reasons.
The trade war is unprecedented in scale, given the global nature of modern business.
It takes time for official statistics to catch up, especially when tariff rates chop and change so much.
Any duties on exports to the United States are a threat to company sales and economic growth alike – in both the US and the rest of the world. Many carmakers, for example, have refused to offer guidance on their outlooks for revenue and profits.
Apple warned on Thursday night that US tariffs would add $1.1bn of costs in the three months to September alone.
Barriers to business are never good but the International Monetary Fund earlier this week raised its forecast for global economic growth this year from 2.8% to 3%.
Some of that increase can be explained by the deals involving major economies, including Japan, the EU and UK.
US growth figures have been skewed by the rush to beat import tariffs.
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The big risk ahead?
It’s a self-inflicted wound.
The elephant in the room is inflation. Countries imposing duties on their imports force the recipient of those goods to foot the additional bill. Do the buyers swallow it or pass it on?
The latest US data contained strong evidence that tariff charges were now making their way down the country’s supply chains, threatening to squeeze American consumers in the months ahead.
It’s why the US central bank has been refusing demands from Mr Trump to cut interest rates. You don’t slow the pace of price rises by making borrowing costs cheaper.
A prolonged period of higher inflation would not go down well with US businesses or voters. It’s why financial markets have followed a recent trend known as TACO, helping stock markets remain at record levels.
The belief is that Trump always chickens out. He may have to back down if inflation takes off.
It is “Liberation Day” III – the third tariff deadline set by Donald Trump.
Countries without bilateral trade agreements will soon face reciprocal tariffs – ranging from 25% to 50% – with a baseline of 15% to 20% for any not making a deal.
He has delayed twice, from April to July and from July to August, but hammered this date home in his trademark caps-on style: “THE AUGUST FIRST DEADLINE STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!”
“Will not be extended” for anyone but Mexico, it seems. The country secured a 90-day extension at the last minute, with Mr Trump citing the “complexities” of the border.
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Explained: The US-UK trade deal
By close of business on the eve of deadline, he had a handful of framework deals – some significant – including the UK (10%), the EU, Japan and South Korea (15%), Indonesia and the Philippines (19%), Vietnam (20%).
On the EU agreement, which he struck in Scotland, the president said: “It’s a very powerful deal, it’s a big deal, it’s the biggest of all the deals.”
But what happened to the “90 deals in 90 days” touted by the White House earlier this year?
The short answer is they were replaced by letters of instruction to pay a tariff set by the US.
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How Trump 2.0 changed the world
Amid of flurry of late activity, the US played hardball with major trading partners like Canada.
“For the rest of the world, we’re going to have things done by Friday,” said US Commerce Secretary Howard Lutnick – the “rest of the world” meaning everyone but China.
There is, apparently, the “framework of a deal” between the world’s two largest economies, but talks between Washington and Beijing are continuing.
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Worker begs America for help
In terms of wins, he can claim some significant deals and point to his tariffs having generated an impressive $27bn (£20.4bn) in June, not bad for a single month.
But the legality of the approach is under siege – with the US Court of International Trade ruling that the “Liberation Day” tariffs exceeded the president’s authority, with enforcement paused pending appeal.
The deadline has stirred the pot, forcing a handful of deals onto the table. Whether they stick or survive legal scrutiny is far from settled.
But the playbook remains the same – threaten the world with trade chaos, whittle it down, celebrate the wins, and pray no one checks what’s legal.
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.
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Is Trump’s AI plan a ‘tech bro’ manifesto?
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.
Listen to The World with Richard Engel and Yalda Hakim every Wednesday
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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..
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