British Steel, the UK’s second-largest steel producer, was put into administration today, with the loss of up to 5,000 jobs.
A further 20,000 jobs along the company’s supply chain are also at risk, the BBC reported.
British Steel had been trying to secure £75 million in emergency funding to help it address what it called “Brexit-related issues.” It also faced a weaker pound and heightened trade tensions between the United States and China. Orders from European customers have slumped, according to media reports.
In a statement, Business Secretary Greg Clark said the government had worked “tirelessly” to secure a solution for British Steel, but “can only act within the law, which requires any financial support to a steel company to be on a commercial basis.”
“I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made,” he added.
EY was appointed as special manager to assist in the company’s administration, Reuters reported.
“This is devastating news for the thousands of workers in Scunthorpe and across the UK,” Tim Roache, general secretary of the GMB steelworkers’ union, said in a statement. “Consecutive UK governments have failed to protect our proud steel heritage, and now this prime minister is overseeing its demise.”
British Steel was bought for just £1 by private equity buyers from India’s Tata conglomerate, which had bought Anglo-Dutch steel firm Corus in 2007.