UK government awaits GFG refinancing, prepared for collapse

The UK government wants to see what new financing GFG Alliance can arrange before taking any action to support its UK plants. But officials are prepared to let Liberty Steel collapse into administration before stepping in, says UK business secretary Kwasi Kwarteng.

“It’s an important national asset and what we have to do is distinguish between Liberty Steel and the company that sits above it, which is called the Gupta Family Group,” Kwarteng told BBC radio on Tuesday. The government’s top priority is to make sure the group’s UK plants continue operating, he added.

When asked if the government wants to let Liberty collapse so that it separates from GFG, Kwarteng said officials are “looking at all plans at the moment”. But they want initially to see how GFG can refinance its debt, Kallanish notes.

The government rejected GFG’s request for a £170 million ($235m) emergency loan because of concerns over the group’s opacity. “We are custodians of taxpayers money and there were concerns over the very opaque structure of the GFG group, and we feel that if we gave the money there is no guarantee that money would stay in the UK and protect our British jobs,” Kwarteng commented.

The business secretary also said UK net zero legislation has “changed the dynamics in terms of government’s relationship to parts of the economy”, making government intervention in the private sector more acceptable in some circumstances.

The GMB union said it would seek an urgent meeting with Kwarteng, following the government’s rejection of GFG’s emergency loan request, to discuss a “Plan B” that would include public ownership of Liberty’s UK businesses.

Adam Smith Germany