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Published: 16/07/2026
The government has formally brought British Steel into public ownership after the Steel Industry (Nationalisation) Act received royal assent on Wednesday.
Dr David Crosthwaite, chief economist at BCIS, said the decision should help to maintain a domestic supply of virgin steel, strengthening security of supply for critical construction and infrastructure projects.
He added that it also appears to be driven primarily by the need to preserve steelmaking capacity to support national defence and rearmament requirements during periods of conflict.
‘The move provides an immediate boost for the steel industry, but significant long-term challenges remain,’ he said. ‘UK energy costs are very high and continue to be affected by market volatility. British Steel’s Scunthorpe site also carries substantial operating costs, even before inflationary pressures are taken into account. As a result, the success of this move is likely to depend on how well new policies like the updated steel import tariff rules and Carbon Border Adjustment Mechanism next year can stimulate demand.
‘At present, the outcome is unclear. Some in the construction industry have raised concerns that businesses could face higher costs for imported steel products that are not readily available from UK suppliers. It remains to be seen how additional costs will affect the market, but if they contribute to higher insolvencies or place further pressure on construction supply chains, they could present a major headache for the government.
‘The government was under pressure to act and public ownership was likely to be the most practical response in the circumstances. However, it remains a significant risk and, given the costs involved, could increase pressure on the public finances ahead of this year’s Budget.’
British Steel has been operating under government intervention since April 2025 to maintain steel production and prevent the closure of its blast furnaces.
The government confirmed that British Steel would be brought under public ownership after it failed to reach an agreement with its previous owner, Jingye.
Jingye is now reportedly seeking compensation following the decision, although the government has said it may limit or refuse any compensation.
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