The Chancellor, Philip Hammond is set to make a speech at a CBI dinner tonight, where he is expected to say that supporters of a no-deal Brexit are trying to hijack the referendum result.


Philip Hammond will be taking a firm swipe at the supporters of a no deal Brexit amongst his fellow Tory MPs when he gives his speech tonight at the CBI annual dinner in The Brewery in London.

In his speech he is expected to warn that his party should not copy the populist right in claiming that a WTO Brexit was the only 'truly legitimate Brexit'.

He will also say that unless the Brexit issue is resolved soon, the country could end up with a new PM leading the country towards a what Hammond calls a damaging no deal exit for 'ideological' reasons.

He will also say that "all the preparation in the world" will not avoid the consequences of a no deal Brexit.

According to reports he will say:

"On the populist right, there are those who now claim that the only outcome that counts as a truly legitimate Brexit is to leave with no deal.

"Let me remind them: the 2016 Leave campaign was clear that we would leave with a deal.

"So to advocate for no deal is to hijack the result of the referendum, and in doing so, knowingly to inflict damage on our economy and our living standards."

As I outlined in a video yesterday, the majority of Tory MPs are Remainers and they will love this rhetoric.

Hammond is doing his best to get a Remainer, probably him, into Number Ten. And we all know in which direction he would take the country, don't we?

Moving on. After telling everyone he would vote for the Lib Dems in this Thursday's EU elections, arch Tory Remainer Lord Heseltine, has had the Conservative whip removed says the BBC.

And a Tory party spokesperson said:

"As a result, the Chief Whip in the House of Lords has informed Lord Heseltine that he will have the Conservative whip suspended. This will be reviewed if he is willing to support Conservative candidates at future elections."

But according to Jonathan Isaby writing in Brexit Central, Lord Heseltine has not been thrown out of the party, despite earlier warnings that such action was incompatible with Tory party membership. They do need to keep every member they can.

Now a few thoughts on British Steel. Much is being made of the Brexit angle and some make it look like Brexit uncertainty has caused all the company's woes.

The Company says it needs a big cash injection to stay afloat to address what it calls 'Brexit related issues'.

Crucially 4,000 jobs jobs are directly affected and another 20,000 supply chain jobs are also at risk.

But this whole Brexit bit did not totally stack up with me, so I did a bit of research.

I have to say that I'm no commodities expert but I have tried my best to dig out some relevant information.

Now, the connection with Brexit uncertainty is that, last year, the EU Commission temporarily suspended UK carbon credit processes ahead of Brexit. This led to British Steel having to buy these credits on the open markets leading to a need for an emergency loan from the government.

But the FT says that some are questioning the need for that emergency loan, as a huge investment package had already been put together for British steel by its investors.

And the FT also says that British Steel pushed ahead with investing £40 million in the French steel producer Ascoval at the same time as begging for a UK government bail-out.

However, there are also other factors at play here.

There is a bit of a glut on the world's steel markets so prices are depressed and the OECD points out that there are more steel works planned across the globe and says that:

"Should these projects be realised, global steelmaking capacity could increase by 4-5 percent between 2019 and 2021, in the absence of closures."

Then there's the raw materials involved.

The UK imports the coal and the iron ore that is used to produce steel.

The price of iron ore has increased worldwide by about 44% since the end of 2018 and, according to the Financial Review, prices could stay elevated well into next year.

And some of this has been driven by a mining tragedy in Brazil when a dam collapsed killing 300 people and flooding a mine.

This, says Patrick Commins of Financial review:

"…ultimately ripped 93 million tonnes from seaborne iron ore supply, or about 6 per cent of the total market. Unsurprisingly, prices for the bulk commodity jumped from about $US75 a tonne to above $US90."

But to offset some of this is the level of Sterling and on this the House of Commons Library briefing paper on the UK steel industry says:

"A lower pound makes steel made in the UK cheaper to foreign buyers, potentially boosting demand for UK steel. However, a lower pound makes imports more expensive, meaning imported coal and iron ore, used in the production process in some of Tata’s UK operations, will cost more.

"The higher cost of imports will also make imported steel more expensive to UK buyers, potentially lowering demand for foreign-made steel and increasing demand for steel made in the UK."

But, overall it looks to me like a combination of increased raw materials prices, high UK energy prices and low prices for goods produced, coupled with an unforeseen cost to purchase carbon credits to maintain operations have all contributed.

As I said I'm no expert and I don't know how much the company hedged against this sort of thing happening, but it looks like British Steel has been hit by a perfect storm of adverse events. And the Brexit bit was caused by the actions of the EU Commission.

The end result could be that British Steel goes into administration in the next 24 to 48 hours, which will hit workers and their families the hardest.


FT: British Steel collapse fears spark scrutiny of owners Greybull

Comment Here!