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Why is Britain's steel industry in meltdown?

Why is Britain's steel industry in meltdown?

TATA Steel's shock plans to sell its UK business, threatening thousands of jobs, is the latest blow to the struggling industry. But why is Britain's steel industry in crisis?

The government has held emergency talks in a bid to save Britain's biggest steel manufacturer after Indian firm Tata Steel announced plans to sell its British operation.

The move has threatened thousands of jobs at Britain's largest steelworks in Port Talbot in Wales. But what is behind the current meltdown?

Why is Britain's steel industry in crisis?

Global steel prices have plummeted after a fall in demand following the financial crisis, while there have been a large increase in cheap exports from China.

The government and EU have come under criticism for failing to prevent China from dumping steel on the international market.

As well as greater competition, the UK has high labour costs and many of its blast furnaces seem outdated compared to more modern technology.

High UK energy costs have also hampered the country's steel production, which requires large amounts of energy.

How has the UK steel industry declined?

Britain once had a great steelmaking industry, which employed more than 200000 people in the early seventies. It now employs only about 18000 workers.

The decline has taken place over the past half century with huge job losses in the 1960s, 1970s and early 1980s.

The UK steel industry was privatised by the Conservatives in 1950 re-nationalised by Labour in 1967 and privatised again by Thatcher in 1988.

What impact would Brexit have on the steel industry?

Ukip leader Nigel Farage has warned that a vote remain in the EU at this summer's in /out referendum would spell the "End of the steel industry in this country".

He said Brexit would allow Britain to make energy costs more competitive and offer greater protection against China's dumping of cheap steel on international markets.

But Prime Minister David Cameron hit back at claims Britain's EU membership was hampering efforts to help the UK steel industry.

Cameron said it was "vital" EU markets remain open to British steelmakers because about half of British steel production goes to the EU.

He said: "If we were on the outside, we might well find that is was our steel that was having those tariffs and those taxes put upon it."

What has happened this year?

The latest announcement from Tata Steel affects workers at sites in Port Talbot, Rotherham, Corby and Shotton. There are 15000 jobs at stake in total.

Meanwhile there are also plans for a rescue deal to save its Scunthorpe steelworks, while last year Thailand's SSI announced plans to shut Redcar works with the loss of 2200 jobs.

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01 April 2016, 15:41