Johnson will also feel the pressure of the collapse of Greensill and his partners | Opinion

Britain’s Sanjeev Gupta said on Tuesday that his GFG Alliance group has adequate funding, a day after his key financial partner Greensill said GFG had started defaulting on debt payments.

It is difficult to know exactly what is happening. Its Liberty Steel branch operates in 12 countries and is the UK’s third largest steelmaker. Although the GFG subsidiary promised to publish the consolidated accounts last year, it has not done so, and the latest published accounts of its British businesses are from two years ago. Greensill’s attorneys say GFG is in “serious financial trouble.” The FT notes that Greensill has $ 5 billion of exposure to GFG. If she needs rescue, her private peers are unlikely to help her. Despite rising steel prices, as producers rush to restart their facilities, the European market suffers from overcapacity. Its rivals could benefit if GFG’s plants, which contribute more than 5% of Europe’s annual production, were to shut down.

And the government? Boris Johnson is unlikely to inject capital into Gupta’s empire, given its global reach and pile of debt. But it could come under pressure to finance the British parts or buy them once the debt is restructured. Even that could be expensive. The UK market is not competitive, largely because electricity costs are 62% and 86% higher than in France and Germany, UK Steel calculates. Tata Steel UK had an operating loss in the last two years. It is true that GFG supplies local groups such as Rolls-Royce, but the country already imports 61% of the steel. You can always matter more.

London may end up helping: Liberty employs 15% of its 35,000 workers in the country. Johnson is paying millions of ERTE, and he will not want unemployment to go up when they are over. Liberty plants are far from the capital, so letting them collapse would undermine its policy of “leveling out” the poorer regions. But given the challenges in the steel industry, you should prepare for a long-term investment with an uncertain exit.

The authors are columnists for Reuters Breakingviews. Opinions are yours. The translation, of Carlos Gomez Down, it is the responsibility of Five days

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