Britain’s second largest steel firm has asked the government for emergency funding to prevent it from collapse, just two weeks after it received a £120m loan.
British Steel is reportedly in conversation with the UK Government over a £75m rescue package, with the firm blaming “Brexit-related issues” for its financial difficulties. It is feared that the firm’s collapse could trigger thousands of job losses at its plant in Scunthorpe, with the firm employing 4,500 people. The new request for the injection of funds has also raised concerns over the future over the industry as a whole.
British Steel bought the struggling Scunthorpe plant from Tata Steel in 2016. The plant is one of the last steelworks in the UK and is a supplier of Network Rail, which manages the infrastructure of the UK’s railways. It is understood the requested money would be used to pay for a bill from the European Union over its carbon dioxide emissions.
The Department of Business, Energy and Industrial Strategy said that it could not comment on speculation about whether new fresh funds could be injected into the firm.
According to Sky News, government ministers are preparing contingency plans in case of the firms collapse. A collapse could see thousands of job losses and also the potential for major environmental problems involved in trying to decommission a steelworks site.
News has not been good for Britain’s manufacturing sector over the past few months. Many firms have announced their intention to leave the UK due to the Brexit vote, while others have cut back their operations. This story on British Steel comes at a particularly bad time for the government, with just a week before the UK heads to the polls for the European Elections.
Accountancy firm, KPMG is understood to be advising the government over the situation.