ALEX BRUMMER: Steel is a vital UK industry

Kemi Badenoch’s apparent indifference to the plight of the British steel industry must be challenged.

The Business Secretary’s claim that ‘nothing is ever a given’ when it comes to preserving steel production in the UK is alarmingly naïve.

As we approach the anniversary of Russia’s brutal war in Ukraine, Britain’s defense and aerospace industries are vital to the national interest.

Domestic production of the highest quality steel, also vital for new nuclear power, is vital.

The steel cycle is notoriously volatile and there will be periods when domestic production becomes unprofitable. That’s one of the reasons why rates go up and down with the regularity of an elevator.

No sovereign nation can afford to scrap domestic production security for economic reasons any time soon.

And if the Tories are to stand a chance of retaining ‘Red Wall’ seats, they cannot allow the Chinese owners of one of Britain’s last coking plants in Scunthorpe to shut it down.

Electric arc furnaces may be the greener option. But the highest quality steel needed for defense equipment, the nuclear industry and HS2 needs blast furnaces and coking coal.

The idea that Britain’s command of steel is in the hands of India’s Tata and China’s Jingye Group is shameful neglect by successive governments.

In 1999, British Steel merged with Hoogovens, creating the sixth largest steel producer in the world with an annual turnover of £12 billion.

In 2007, the group, renamed Corus, was sold to Tata for £10 billion. Things have gone downhill since then, as the interest in remaining a steel-producing nation has been given over to foreign owners, who have made promises to invest, but are effectively controlling the downturn.

Amazing to think that after this sordid record, the steel industry is still responsible for 35,000 jobs and high quality production.

Rishi Sunak’s government has no choice. It must invest to rebuild a vital industry, not preside over further decline.

Badenoch’s announcement today of the British Industry Supercharger, with measures to help strategic energy-intensive industries, including steel, become more competitive is welcome, but it is too little, too late.

Exploit savers

The high street bank’s earnings season, which was brought to a close by Lloyds, was dominated by net interest margins.

That, in plain English, is the difference between what banks charge for their loans and what they pay for savings, current accounts and other cash deposits.

By this measure alone, Lloyds, led by Charles Nunn, had a good year with a margin of = 3.22.

The bank is also raising its margin outlook for 2023. As we know from the financial crisis, when Lloyds bailed out after bailing out HBOS, building a strong capital base is a good thing.

Still, it’s hard not to have deep reservations about the stock market’s obsession with interest margins. In a world of inflation and rising interest rates, such profits come at the expense of savers.

Any bank that prioritizes improving savings returns and customer service, rather than cutting branches, could gain a competitive advantage. As owner of the Halifax brand, Lloyds has a good view of the mortgage market.

In the year of the Truss bond market shock, daily mortgage lending volumes shrank from £1.5bn to £1.1bn. Lloyds forecasts a 7 percent fall in home prices this year as home loan costs rise.

The bank expects the economy to contract by 1.2 percent this year. That looks too bleak. With inflation falling and interest rates rising moderately in 2023, there is no reason to think house prices will plummet.

The job for Nunn is to find new streams of income without relying on yield-starved savers. Wealth management seemed to be on the right track. If there is a loss of goodwill with consumers, they will look elsewhere.

Citi U-turn

There was great excitement last August when US behemoth Citigroup predicted that UK inflation would rise to 18 per cent in 2023, the highest since the pound crisis of 1976, when Britain was bailed out by the IMF.

Goldman Sachs joined the UK’s declining arms race, claiming the cost of living could reach 22 percent. Citi has now made an incredible reverse fret, claiming prices in the UK will fall to just 2 percent by the end of the year.

Damage to public confidence and good decision-making through outrageous forecasting is inexcusable.