Forging ahead: Britain’s steel industry symbolises global transformation
The Cable | No. 15.2025
Welcome to the 38th Cable, our weekly roundup of British foreign and defence policy.
The world is in a state of flux following the chaotic imposition, relaxation, and, in some cases, the removal, of tariffs by Donald Trump, President of the United States (US), over the last two weeks. While Britain escaped the worst of the tariffs, His Majesty’s (HM) Government appears to be changing its outlook in response to recent events, with the rhetoric coming out of Parliament indicating more proactive involvement of the state in the economy. The decision to intervene in British Steel is a case in point. It is clear that the global economy is undergoing a period of rapid transformation. Let’s hope HM Government is up to the task of steering the country through these seismic changes.
Welcome back to The Cable!
Green machines: Britain aims high in its clean energy transition
From enhancing living standards to powering economic growth, energy is the lifeblood of the modern world. However, the United Kingdom (UK) faces multiple intersecting challenges in its electricity sector, impacting productivity and hamstringing growth. These can be broadly broken down into high costs, supply security and the green transition.
Of these, the most pressing for Britain is the high cost of its electricity, in particular the industrial price of power, which is one of the highest in the world. For the UK’s industries to be competitive, energy must be cheap, but ensuring a secure supply of cheap energy is an issue which has plagued British manufacturing for decades. The prime cause of high prices is the UK’s status as a net importer of energy – in particular natural gas – with Britain importing approximately half of its gas demand. This has left the country highly vulnerable to global market shocks, such as the one which followed Russia’s full-scale invasion of Ukraine in 2022. Likewise, while Britain has stabilised its gas supply through American Liquefied Natural Gas (LNG), the new, more transactional, US administration brings with it additional security considerations for HM Government.
Finally, the UK has committed itself to achieving 95% clean electricity by 2030, one of the most ambitious climate targets in the world. However, as a recent Primer by the Council on Geostrategy argues, ‘A rushed transition risks infrastructure gaps, hindering future energy system development.’ Additionally, analysis shows that Britain’s electricity demand will accelerate rapidly in the coming decades, primarily due to the electrification of transportation, heating and industrial processes, as well as the growth of data centres. This will require a significant buildup of energy projects and supporting infrastructure, which brings with it a high price tag.
While the energy transition comes with numerous challenges, a successful switch to a mostly green economy will mitigate not just the impacts of climate change, but also insulate the UK from shocks in the global energy market and thus enhance energy security. In the longer term, it will bring down the price of electricity. In an era of increased geopolitical uncertainty and competition, it is in Britain’s national interest to pursue its climate ambitions.
Key diplomacy
John Healey, Secretary of State for Defence, alongside Sébastien Lecornu, his French counterpart, convened a planning meeting of defence ministers from approximately 30 nations involved in the so-called ‘coalition of the willing’ in Brussels on 10th April. The meetings focused on how best to use the capabilities of each nation in the coalition to support Ukraine’s long-term defence and security.
Sir Keir Starmer, Prime Minister, held talks with a number of world leaders in the last week:
The Prime Minister held a call with Shigeru Ishiba, Prime Minister of Japan, on 10th April. The leaders of the two island nations discussed the current tariff situation and agreed that the UK and Japan should work closely together with other like-minded nations to lower trade barriers. They also agreed to pursue deeper cooperation on defence and security matters, particularly in relation to the Global Combat Air Programme (GCAP), and reaffirmed their commitment to deliver the next generation of fighter jets.
On 9th April, Sir Keir spoke to Mohammed bin Salman, Crown Prince of Saudi Arabia. The two discussed recent developments in global trade and reiterated their aim to strengthen bilateral economic partnerships, including building on ongoing negotiations for a UK-Gulf Cooperation Council (GCC) free trade agreement. Finally, they also agreed to continue working on developing deeper defence and security cooperation between their two countries.
On 7th April, Sir Keir held a call with Lawrence Wong, Prime Minister of Singapore, in which they discussed tariffs, trade and strengthening bilateral and multilateral relations, in particular through the Association of Southeast Asian Nations (ASEAN) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). They also discussed security and defence issues and the upcoming deployment of the UK’s Carrier Strike Group to the Indo-Pacific region.
Rachel Reeves, Chancellor of the Exchequer, and Jonathan Reynolds, Secretary of State for Business and Trade, took part in the 13th UK-India Economic and Financial Dialogue (EFD), aimed at unlocking business opportunities as the two countries look to strengthen economic ties and secure a Free Trade Agreement and Bilateral Investment Treaty. Following the EFD, HM Government announced £400 million of trade and investment into the UK to help boost the British economy.
Defence
Final preparations are underway for Operation HIGHMAST, the deployment of the Royal Navy’s Carrier Strike Group (CSG) to the Indo-Pacific, which will begin when HMS Prince of Wales leaves Portsmouth on 22nd April. Around 4,000 British military personnel will take part in the operation, alongside 12 other nations supporting the CSG with ships and/or personnel. The CSG will transit the Indian Ocean, conducting exercises and port visits with partner nations, including Australia and Japan.
Last week, Sir Stephen Lovegrove, former National Security Adviser (2021-2022), was officially appointed as the Special Representative on AUKUS. Sir Stephen will support the Defence Secretary and the National Security Adviser to drive the AUKUS programme forwards. Last year, Sir Stephen was commissioned by HM Government to conduct a review of the UK’s progress against its core commitments under AUKUS. His first act as special representative will see him travel to Washington to present the findings of this review to the US government.
On 11th April, a new military aid package for Ukraine worth £450 million was announced following a meeting of the Ukraine Defence Contact Group – chaired by Healey and Boris Pistorius, his German counterpart – where approximately 50 nations coordinate support for Ukraine. This will include £350 million from Britain – taken from the UK’s pre-existing £4.5 billion budget for military aid to Kyiv – focused on repairs and maintenance to vehicles and equipment, radar systems, anti-tank mines and hundreds of thousands of drones.
Environment and climate
Approximately 41% of global electricity was generated from low emission energy sources in 2024, according to a new report by think tank Ember. Britain is a global leader in clean energy deployment, which provided around 66% of the UK’s electricity last year, much higher than the global average. Wind and solar contributed 36% of Britain’s electricity in 2024, exceeding fossil fuel generation for the first time. Following the release of this new data, Frankie Mayo, an analyst at Ember, stated that the UK:
…has achieved something massive, shifting its power system from being a huge polluter to one where renewables are thriving, in an astonishingly short period of time.
How Britain is seen overseas
The Centre for European Policy Analysis published an opinion piece exploring the longstanding fear and grudging respect the Kremlin holds towards the British intelligence services. The authors state that Russia has always been obsessed with Britain’s ‘superior spy craft’, stemming from operations by the UK intelligence services during the Russian Civil War and throughout the Cold War. With Russia’s full-scale invasion of Ukraine and renewed confrontation with the Euro-Atlantic, this historical memory continues to influence the Kremlin’s perception of British espionage capabilities.
How competitors frame Britain
TASS interviewed Sergei Lavrov, Foreign Minister of Russia, on the potential deployment to Ukraine of the coalition of the willing being developed in London and Paris, in which he stated that ‘the French and the British are particularly obsessed with the idea’ of sending their troops to fight Russia. The interview concludes with a warning from Lavrov ‘...I hope they have not completely forgotten the lessons of history.’ Moscow should remember its own lessons from history: a maritime democracy such as the UK can be a implacable foe.
Following a story in The Times reporting on the growing Russian threat to British undersea infrastructure, TASS quoted the Russian Embassy to the UK, which has refuted the claims. A spokesperson for the embassy said, ‘The truth has been completely drowned in these fathomless depths of falsehood. Russia has never threatened the security of the UK and its residents…’. A complete fabrication from Russian state media, as years of covert actions in the UK – including the murder of Alexander Litvinenko and the Salisbury poisonings – clearly show.
Is virgin steel still a necessary component of national power in the 21st century?
Last year, we wrote that the UK’s steel industry is at a crossroads. That is as true now as it was then, as highlighted by the recent challenges at British Steel’s Scunthorpe plant.
Jingye, the Chinese owners of British Steel, said last month they planned to close the Scunthorpe plant’s two blast furnaces, putting 2,700 jobs at risk. They had then refused to pay for new raw materials, with coal and iron ore deliveries to Immingham port going unpaid for – widely seen as a deliberate move towards closure. This raised the prospect of the blast furnaces cooling beyond easy or affordable recovery, and led to HM Government recalling Parliament to take control of British Steel with emergency legislation.
The government’s emergency legislation granted broad powers to take control of British Steel’s operations, including securing raw materials and directing the workforce, but stopped short of immediate full nationalisation. The immediate priorities were to secure the necessary materials to keep the blast furnaces running and ensure workforce continuity, with support from other UK steel companies. Yesterday, Angela Rayner, Deputy Prime Minister, announced that the delivered materials have now been paid for.
Underlying the immediate crisis are broader, more fundamental challenges. Britain is looking to decarbonise quickly by moving from blast furnaces to greener Electric Arc Furnaces (EAFs). However, this transition is complicated by the UK’s high industrial electricity costs and the need for substantial investment. The industry also faces intense global competition and trade tensions, with recent US tariffs playing a role.
The UK steel industry contributed approximately £1.8 billion to the UK’s Gross Value Added (GVA) in 2023 and directly employed around 33,700 people, with many more jobs supported indirectly. These jobs are concentrated in regions such as Wales, and Yorkshire and the Humber.
While the UK’s steel production of 5.6 million tonnes in 2023 was a historic low, the sector’s strategic value lies in national security, infrastructure resilience and maintaining sovereign capability. The potential loss of virgin steel production capacity would make Britain a Group of Seven (G7) anomaly.
However, EAFs are currently estimated to be able to produce about 90% of the grades of steel which a blast furnace can produce. Scientists are working on ways to improve the quality of recycled steel, and the addition of an iron source, such as direct reduced iron, should allow the UK to produce the highest qualities of steel for demanding applications through recycling, where the supply of scrap steel is plentiful.
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