British Steel

British Steel could fall into administration as soon as today, putting 5,000 jobs directly at risk and endangering tens of thousands more in the supply chain (not to mention all the jobs that depend on the jobs in the supply chain).

British Steel has blamed Brexit for the squeeze on its finances. Union sources said British Steel had lost 25% of orders at its Scunthorpe plant because of Brexit uncertainty.

The plunge in the value of Sterling following the referendum has made the raw materials far more expensive. Adding to that EU buyers would have to pay tariffs of 20% on British Steel’s products if the UK left without a deal. 

Steel contracts are typically agreed well in advance of the product being delivered. As things stand, the UK is due to leave at the end of October and the terms of that separation are not known, though in the absence of a deal being agreed, the default position if a 'no-deal' crash-out Brexit (unless the next PM can get an extension).

That is the inevitable. default position that is imposed by Article 50 activation. 

This means British Steel’s overseas customers don’t know what tariffs will apply to steel they buy from the company. Adding to the problem in overcapacity in Europe and China dumping cheap steel onto the market. Not only does this lower the price but buyers thinking about buying from us have to factor in the fact that the product might be 20% more expensive in a few months time.

That's probably OK if you're buying some sheets to forma roof for your shed. Not so good if you're buying tons of the stuff to form the frame of a building or to build a warship.

Sources close to the company say orders from customers in the EU and further afield have dried up as a result of all these factors.

*Update 10.45 - British Steel has been placed into insolvency*