The government’s decision to take British Steel into public ownership dominates this morning’s UK business news, marking one of the most significant state interventions in British industry for decades.

The move comes as the incoming government faces warnings about weak economic growth, limited fiscal headroom and persistently high energy costs. At the same time, ministers are attempting to revive London’s struggling stock market, pension providers are questioning whether regulatory barriers are preventing investment in British businesses, and retailers are pressing for reductions in employment taxes and business rates.

There is more positive news for exporters following the implementation of the UK-India trade agreement, while European companies are preparing for their strongest earnings season in more than three years. However, much of that profit growth is expected to come from energy companies benefiting from higher oil and gas prices rather than from a broad improvement in the European economy.

British Steel brought into public ownership

The government has formally taken British Steel into public ownership, saying that nationalisation was necessary to protect the UK’s national interest and preserve domestic steelmaking capacity.

Ministers had already taken operational control of the company in April 2025 after its Chinese owner, Jingye, threatened to close the blast furnaces at Scunthorpe. That intervention protected approximately 2,700 direct jobs and thousands more throughout the steel supply chain. The latest decision converts that temporary operational intervention into public ownership.

The move gives the government greater control over British Steel’s future investment, production and employment strategy. It also transfers more of the financial and commercial risk to the taxpayer.

Steel is considered strategically important because it is used in defence, railways, energy infrastructure, construction and advanced manufacturing. The government argues that allowing the Scunthorpe furnaces to close would leave Britain dangerously dependent upon imported primary steel for critical national projects.

The decision follows the introduction of legislation allowing ministers to nationalise steel businesses where a public-interest test involving national security, critical infrastructure and economic considerations has been satisfied. The government had previously stated that the power would not be used lightly.

Nationalisation does not resolve British Steel’s underlying problems

Public ownership prevents an immediate closure, but it does not automatically create a commercially sustainable business.

British Steel must contend with high electricity prices, ageing infrastructure, international overcapacity and competition from lower-cost producers. The Scunthorpe works also faces the expensive transition from carbon-intensive blast furnaces towards lower-emission steelmaking.

The government will now need to determine whether to retain blast-furnace production, construct electric arc furnaces or adopt a combination of technologies capable of preserving the manufacture of primary steel.

Electric arc furnaces can produce lower-emission steel using recycled scrap, but they do not currently provide a direct substitute for every grade of steel produced from iron ore. The long-term strategy must therefore balance decarbonisation with the need to retain capabilities required by defence, infrastructure and specialist manufacturing.

The government has already committed up to £2.5 billion of support for the wider steel sector during this Parliament. New trade protections introduced on 1 July reduced tariff-free steel-import quotas by 51%, with imports above those quotas generally facing a 50% tariff where equivalent products can be manufactured domestically.

Those measures may improve the competitive position of British producers. However, they can also increase costs for manufacturers that require grades or quantities of steel which cannot be obtained reliably within the UK.

The challenge will be to protect strategically important production without making British automotive, engineering and construction businesses less competitive.

The taxpayer will expect a credible plan

Public ownership creates several immediate questions.

The government must establish British Steel’s value, determine the compensation payable to Jingye and provide sufficient working capital to continue operating the business. It must then decide whether British Steel should remain in state ownership, be restructured for a future sale or become part of a longer-term national industrial company.

A successful intervention would preserve skills and productive capacity while creating a modern and competitive steel business. An unsuccessful intervention could require continuing subsidies without resolving the underlying cost disadvantage.

The decision will also be watched by international investors. Ministers have described nationalisation as an exceptional response to a strategically important business, but investors will want reassurance that it does not signal a broader willingness to take control of privately owned companies.

For Scunthorpe and the surrounding economy, however, the immediate effect is greater certainty. The closure of the furnaces would have affected not only British Steel employees but contractors, logistics companies, local suppliers and household spending throughout North Lincolnshire.

The leader of North Lincolnshire Council welcomed the legislation but urged ministers to use their new powers to secure primary steelmaking and create a more ambitious industrial future for Scunthorpe.

Incoming government faces a £330 billion fiscal challenge

British Steel will be only one of the difficult economic decisions confronting Andy Burnham when he enters Downing Street.

The Resolution Foundation estimates that weak growth, an ageing population and increasing ill health are collectively costing the public finances approximately £330 billion a year compared with the position Britain might otherwise have achieved.

Around two-thirds of that figure is attributed to the slowdown in economic growth per person since 2007. The estimate should not be interpreted as a £330 billion deficit that must immediately be filled. It represents the cumulative annual difference between Britain’s current position and a counterfactual economy in which earlier growth trends had continued.

The think tank argues that the incoming government requires a new fiscal strategy if it is to avoid increasingly difficult combinations of tax rises, spending reductions and additional borrowing.

It recommends replacing the state-pension triple lock with an earnings-based system, reforming motoring taxation as electric vehicles reduce fuel-duty receipts and investing in the productivity of public services.

The report estimates that the economic effects of the war involving the United States and Iran may already have reduced the government’s headroom against its fiscal rules from £23.6 billion in March to around £10 billion.

This leaves the incoming administration with little protection against another economic shock or deterioration in tax receipts.

OECD calls for discipline alongside investment

The Resolution Foundation’s warning follows the OECD’s latest assessment of the British economy.

The organisation expects UK growth to slow from 1.4% in 2025 to 0.9% in 2026 before recovering modestly to 1.1% in 2027. Inflation is forecast to rise to 3.7% this year before declining to 2.4% next year.

The OECD identified volatile energy prices, weak productivity, fiscal pressures and significant regional inequalities as continuing barriers to economic performance and higher living standards.

It urged Britain to maintain fiscal discipline because high public debt, substantial interest payments and rising spending on health and social care leave limited room for unfunded commitments.

However, the organisation did not recommend austerity without investment. It argued that public spending should be directed towards projects that improve productivity, including electrification, skills, infrastructure and measures capable of narrowing regional economic disparities.

The distinction is important. Reducing investment can improve borrowing figures temporarily while weakening future growth and tax revenue. Borrowing without a credible plan can instead increase gilt yields and debt-interest expenditure.

The incoming government must therefore demonstrate not simply that spending is controlled, but that public money is directed towards projects capable of increasing productive capacity.

Shabana Mahmood expected to become Chancellor

The Financial Times has reported that Home Secretary Shabana Mahmood is expected to be appointed Chancellor when Andy Burnham forms his government, although the appointment had not been formally confirmed this morning.

The prospect of Mahmood moving to the Treasury has reassured some investors because she is regarded as belonging to the more fiscally cautious wing of the Labour Party.

Sterling strengthened against both the euro and dollar following reports of the likely appointment, while UK government bonds performed more strongly than several European counterparts. Investors had previously been concerned that the incoming prime minister might select a Chancellor more willing to increase borrowing significantly.

Market approval does not guarantee economic success, and the new Chancellor’s eventual policies will matter more than perceptions surrounding the appointment.

Mahmood would also arrive at the Treasury without substantial previous experience of economic policymaking. She would immediately face difficult decisions involving taxation, energy costs, public-sector investment, pensions and the autumn Budget.

The financial markets are likely to examine whether the new government remains committed to its fiscal rules and how it proposes to fund any additional spending commitments.

Downing Street seeks help with London’s listing crisis

Ministers have reportedly held discussions with senior figures from private equity and venture-capital groups as they seek ways to revive the London Stock Exchange.

Only seven companies completed London listings during the first half of 2026, raising approximately £577 million. Several businesses that had been expected to pursue initial public offerings have postponed their plans or considered listing in the United States instead.

The discussions have reportedly included representatives from major investment groups such as CVC, EQT, Elliott and General Atlantic.

The government hopes private-equity firms can help identify the reforms necessary to make London a more attractive place to float businesses. Options already considered include temporary relief from stamp duty, more flexible listing requirements and changes to director incentives.

However, private equity has a complicated relationship with public markets.

Private-equity firms can develop companies that eventually become stock-market candidates. They can also acquire listed British companies and remove them from the exchange, contributing to the decline in the number of London-quoted businesses.

International buyers have been attracted by relatively low UK company valuations. This has supported takeover activity but weakened the domestic market by reducing the number of larger companies available to British investors.

The underlying issue may therefore be less about listing rules than about whether companies believe London investors will provide valuations comparable with those available in New York.

Pension provider warns that regulation is obstructing investment

The debate over London’s capital markets is closely connected with the government’s attempts to encourage pension funds to invest more money in British companies.

Aegon has warned that regulatory uncertainty is making it difficult for pension providers to meet commitments under the Mansion House Compact.

Eleven pension businesses agreed to invest at least 5% of their default defined-contribution funds in unlisted equities by 2030. Aegon, which manages approximately £160 billion in the UK, says that progress has been made but important regulatory arrangements remain unresolved.

The principal concerns involve performance fees and rules governing the types of investment vehicle that pension funds may use.

Default workplace pension funds are normally subject to an annual charge cap of 0.75% of a saver’s pot. The cap protects members from excessive fees but can make some venture-capital and private-equity investments difficult to accommodate because those funds commonly levy performance-related charges.

Many private-market funds are also structured as closed-ended vehicles that do not comply easily with the Financial Conduct Authority’s permitted-link rules.

The FCA has created long-term asset funds to help pension schemes invest in less liquid assets, but providers have criticised their cost and the time required to obtain approval.

Pension investment involves a genuine trade-off

Increasing pension investment in British infrastructure, start-ups and growing private companies could provide businesses with patient capital and allow savers to share in their success.

However, directing pension money into private markets is not risk-free.

Unlisted investments are more difficult to value and sell than publicly traded shares. Their fees can be higher, while performance varies considerably between managers.

Policies must therefore protect pension savers while avoiding rules so restrictive that schemes cannot invest in potentially productive assets.

The wider lesson is that changing investment regulation cannot, by itself, create attractive investment opportunities. Pension trustees must continue to act in the interests of scheme members and will invest in Britain only where the expected return justifies the risk.

The government must therefore improve the supply of investable projects as well as attempting to redirect capital towards them.

Retailers urge Burnham to reduce taxes and support youth employment

The British Retail Consortium has become the latest business organisation to present demands to the incoming prime minister.

Retailers are asking the new government to reduce business rates, reconsider increases in employers’ National Insurance contributions and help companies employ more young people.

The BRC estimates that retailers have absorbed £6.5 billion of additional employment costs since 2024, alongside increases in business rates and packaging-related charges. It argues that these costs are discouraging investment, reducing recruitment and making it more difficult to keep household essentials affordable.

The organisation says retail can support Burnham’s proposed high-street revival because it provides employment in almost every community and creates entry-level opportunities for younger workers.

Retailers operate with comparatively high numbers of employees and often on narrow margins. Increases in wages and employer taxes can therefore have a greater proportional effect than they do in more capital-intensive industries.

Companies may respond by raising prices, slowing recruitment, reducing opening hours or increasing automation.

Reducing employment costs would have consequences elsewhere

The retail industry’s concerns are significant, but reversing tax and wage increases would involve trade-offs.

Lower National Insurance contributions would reduce government revenue unless the cost were recovered through another tax or lower public spending. Holding down minimum wages could improve the economics of employing inexperienced workers but weaken the incomes of employees already facing high housing, food and energy costs.

Business-rates reform has attracted broad support because the current property-based system can penalise physical shops compared with digital businesses.

Nevertheless, the tax raises substantial revenue for local services. Any significant reduction would require replacement funding or lower council expenditure.

The most sustainable response may involve targeted measures to encourage the recruitment and training of young people, combined with a broader reform of business rates rather than simply transferring the cost between different types of employer.

UK-India trade agreement enters into force

British businesses gained improved access to India this week after the UK-India Comprehensive Economic and Trade Agreement came into effect on 15 July.

The agreement reduces tariffs on thousands of products and expands access for financial, professional, educational and other service businesses.

India will remove tariffs immediately from 64.1% of product categories and phase them out on a further 21%. Britain is removing duties from 96.8% of tariff lines, representing 97.7% of the existing value of trade.

British whisky producers will see Indian tariffs reduced from 150% to 40%, while eligible automotive exports will eventually enter under a quota at a tariff of 10%, compared with rates previously reaching 100%.

The government estimates that the agreement could increase UK GDP by £4.8 billion, raise real wages by £2.2 billion and add £25.5 billion a year to bilateral trade over the longer term. These figures are economic projections rather than guaranteed outcomes.

British companies will also gain improved access to Indian government procurement, education, insurance, financial services and professional markets.

The accompanying Double Contribution Convention means eligible employees temporarily transferred between the countries can continue paying social-security contributions in their home country for up to five years, rather than paying into both systems.

Businesses must convert the trade deal into sales

The agreement creates opportunities but does not remove every barrier facing British exporters.

India remains a complex and competitive market with substantial regional differences, local regulations and established domestic suppliers. Smaller companies may require advice on customs, product standards, distribution and payment arrangements before they can use the tariff reductions effectively.

British importers and consumers may benefit from cheaper Indian textiles, food products, jewellery and manufactured goods. Domestic producers competing with those imports could face additional pricing pressure.

The greatest economic benefit may come from services, where Britain has established strengths in finance, education, law, consulting and insurance.

The agreement gives businesses a stronger framework, but the ultimate effect will depend upon how many companies have the resources and confidence to enter the market.

Ofcom opens investigation into TikTok

Britain’s communications regulator has opened an investigation into whether TikTok’s UK operation has failed, or is failing, to protect children from harmful content.

The investigation has only just begun and does not represent a finding that TikTok has breached the law. Ofcom will examine the company’s compliance with duties introduced under the Online Safety Act.

TikTok and other major platforms have previously been instructed to improve risk assessments and protections covering harmful or illegal material accessed by children.

Ofcom wrote to TikTok, YouTube, Instagram, Facebook, Snapchat and Roblox earlier this year, identifying further action it expected the services to take.

The commercial implications extend beyond the possibility of a regulatory penalty.

Age assurance, content moderation and algorithmic changes can increase operating costs and affect user growth, engagement and advertising revenue. Platforms also face the risk that different countries introduce conflicting requirements, making global services more complicated to operate.

For advertisers, stronger protections could improve confidence in the platforms on which their brands appear. Excessively broad restrictions could, however, reduce the reach and effectiveness of digital campaigns.

European profits forecast to record strongest growth since 2022

European companies are preparing for their strongest earnings season in more than three years.

Analysts expect second-quarter profits among companies in the STOXX Europe 600 index to increase by an average of 15.3%. That compares with forecast growth of 23.7% among companies in the United States.

The European figure appears encouraging, but much of the increase is expected to come from energy producers benefiting from higher oil and gas prices following the conflict in the Middle East.

Excluding energy, European earnings are forecast to rise by approximately 6%, compared with 19.6% for non-energy companies in the S&P 500.

The difference demonstrates the continuing gap between the technology-heavy American market and Europe’s larger concentration of banks, manufacturers, energy producers and consumer businesses.

US earnings are being supported by artificial intelligence, cloud computing and data-centre investment. European companies participate in that growth through semiconductor equipment, engineering and electrical infrastructure, but the region lacks a comparable group of large technology platforms.

Investors will therefore focus heavily on what European companies say about consumer demand, China, energy costs and expectations for 2027.

A day dominated by the role of government in business

Today’s headlines share a common theme: the relationship between government, business and investment is becoming more active and more complicated.

British Steel is entering public ownership because ministers believe its strategic importance outweighs the risks of state intervention. Pension funds are being encouraged to invest more in domestic businesses, but providers say regulations are preventing them from doing so. Retailers want the government to reduce taxes, while the Treasury faces warnings that it has little fiscal capacity to provide widespread relief.

The UK-India agreement demonstrates how government policy can open new markets. The TikTok investigation shows how regulation can impose substantial new responsibilities upon international technology businesses.

None of these interventions is inherently beneficial or harmful. Their effect depends upon their design, implementation and cost.

Nationalisation can preserve strategic capacity but expose taxpayers to continuing losses. Regulation can protect consumers while obstructing innovation. Tax reductions can support investment but weaken public finances. Trade agreements can create opportunity but also increase competitive pressure.

The incoming government will need to balance these competing considerations while restoring economic growth and maintaining confidence in Britain’s fiscal framework.

British Steel may be the most visible decision announced today, but the wider challenge is larger: creating an economy in which strategically important businesses, growing companies and international investors can operate successfully without becoming permanently dependent upon government support.