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23.05.2019 Europe

Eye on France: It's a steal - French money to pay British debt!

By Michael Fitzpatrick - RFI
REUTERS/Scott Heppell
MAY 23, 2019 EUROPE

British Steel is broke. We've known for a while that the company needed at least 35 million euros of government money to keep the furnaces fired-up. Employees at the French subsidiary are worried.

The negotiators had started, you might remember, by asking for nearly 80 million.

On Tuesday, before you could say “20 million will do,” Theresa May's industry minister Greg Clark announced that there was no cash forthcoming. It would, in fact, be illegal for the UK authorities to offer a bent penny in assistance, or even to propose a financial guarantee.

So now the whole enterprise, the second biggest steel-maker across channel, is up for sale. Or for closing down. And it appears that Brexit is to blame.

At least 4,500 jobs are directly under threat, with 20,000 others at risk in supplier companies.

The only good news is that the 270 workers at Ascoval, the northern French foundry bought by British Steel earlier this month, are not directly concerned. As things stand, France is the only future British Steel has.

Which is not really funny at all.
A scandal with its roots in Brexit
This version of British Steel has been in business since 2016, basically supplying rails to the French and cross-channel train transport networks. But the uncertainties about export formalities and the devaluation of sterling associated with Brexit have seen the company's order book and income shrink over recent months, to the point where management had to go looking for a government handout.

That having been definitively refused, the receiver has moved in and the For Sale signs have gone up.

Labour leader Jeremy Corbyn has described the government's failure to provide cash for a bail out as “a scandal”. He wanted the company nationalised. And now, of course, Theresa May is herself facing a future on the dole queue, and certainly has other priorities.

French money to pay British debts?
As for the French subsidiary, the legal structure put in place to protect Paris's investment of 15 million euros (British Steel put up 5 million) is so watertight that there's no danger of French money being used to pay British debts. Which is reassuring, given that Paris has committed itself to investing nearly 50 million euros in the future of Ascoval.

But not everyone is reassured.
A union representative is quoted by left-leaning Libération as saying “we haven't a clue. We're completely in the dark and scared shitless”.

Imagine how the fellah who signs the cheques at the economy ministry must be feeling?