The UK government is poised to fully nationalise British Steel, a significant shift nearly a year after seizing emergency control of the loss-making company. This move comes despite the Chinese owner, Jingye, retaining economic control, which legally prevents the government from selling or strategically altering the business. The government has already spent £377 million propping up British Steel since April, with the National Audit Office warning this could escalate to £615 million by June and potentially £1.5 billion by 2028 under current spending.

Jingye rejected a £100 million government offer last month, demanding far higher compensation. The government is now exploring legislation to gain full legal control, potentially leveraging national security laws after designating steel a strategic national asset. A senior official stressed ongoing negotiations with Jingye, stating they cannot continue indefinitely.

Industry group UK Steel strongly welcomed full nationalisation, citing the need for workforce and supply chain certainty. British Steel's Scunthorpe site, home to Britain's last two blast furnaces and producing 95% of UK rail steel, faces a costly transition to greener electric arc furnaces, threatening thousands of jobs. This development occurs against a backdrop of volatile US tariffs and high UK energy costs, with the government recently announcing a delayed steel strategy focused on trade quotas.

While turnaround investor Michael Flacks expressed interest in acquiring the business, bankers are also sounding out partners, though these plans are moot until the government secures legal ownership.