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Introduction: British Steel taken into public ownership

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

British Steel has been placed under public ownership to safeguard the future of steel production across the UK, according to the government.

The steelworks, which employs roughly 2,700 staff in Scunthorpe, came under government operational control in April last year after its Chinese owner Jingye Group signaled plans to shut its two blast furnaces.

Keir Starmer said:

British Steel forms part of the fabric of our nation and a cornerstone of Britain industrial strength.
Today decision secures the future of steelmaking in the UK, protects skilled jobs and safeguards a vital national capability.
This government will always act in the national interest to support British industry, strengthen our economy and ensure the industries we rely on can thrive long into the future.

Parliament approved legislation on Wednesday permitting the government to bring the steel industry into public ownership if it satisfied a public interest test.

Its nationalization is expected to protect thousands of jobs, support industries that depend on UK-made steel and help safeguard supply chains, major infrastructure projects and national security, the government said.

Jingye had already indicated it would pursue compensation for nationalization, after stating in June last year that it planned to recover as much as 711 million pounds in debts owed by British Steel. The government has said it will appoint an independent valuer to assess whether any compensation is payable. The compensation scheme will be established through regulations expected in autumn.

In March, the National Audit Office found that operating the Scunthorpe steelworks cost the government about 1.3 million pounds a day.

Business secretary Peter Kyle said:

British Steel now belongs to the British people, and our focus is on the future: stabilising the business, backing the communities that rely on it and building a sustainable, competitive and decarbonised steel sector for the years ahead.

British Steel interim chief executive, Allan Bell, has said it is an historic day for Britain and UK manufacturing:

This is a momentous day for British Steel, and everyone connected with our business - our dedicated employees, our valued customers and suppliers, and the tens of thousands of people in our supply chains and local communities. Much more than that, it is an historic day for Britain and UK manufacturing - one which safeguards our future and strengthens national security and infrastructure.
We are grateful to the UK government for the decisive action it has taken, and the support it has given our business - and our people - during such a challenging period. Together, we look to the future with great optimism and will work together to make the world-class steel Britain needs now and for decades to come.

The agenda

7am BST: ONS GDP figures for May
7am BST: Crest Nicholson reports half-year results, postponed from April. Ocado interim results
12.30pm BST: US initial jobless claims
UK parliament summer recess begins

Key events

1h ago UK engineering group Rotork agrees to 4.1 billion pound takeover
1h ago European stock markets fall at the open
2h ago All eyes on Burnham as UK economic growth fragile
2h ago UK economy grew by 0.1 percent in May despite impact of Iran war
2h ago Introduction: British Steel taken into public ownership

More action over in the FTSE 250: Ocado shares have slumped 10 percent this morning after the online grocer reported a set of half-year results that failed to excite investors.

Richard Hunter, head of markets at the broker Interactive Investor, said that many investors had lost patience with the business.

There is little doubt that the underlying robotic technology for packing shipping orders is cutting-edge, impressive and efficient, with automated bots scuttling seamlessly within a preset grid. However, rolling out this CFC (Customer Fulfilment Centre) offering to partners has brought its own challenges, with the international expansion on which the group was relying failing to materialise in a meaningful enough way.
From an investment perspective, there remains a mountain to climb. Recent news that the CEO will be departing, albeit not until a replacement is found in time for the beginning of fiscal 2028, adds another level of uncertainty which could exempt even more investors from entering the fray.

UK engineering group Rotork agrees to 4.1 billion pound takeover

And yet another takeover deal this morning - the FTSE 250 engineering group Rotork has agreed to a 4.1 billion pound takeover by its bigger Swiss rival ABB.

ABB has agreed to pay 506p a share in cash for Rotork, which manufactures safety devices that open and close valves in pipelines. The shares traded at around 290p yesterday. The stock has surged 67 percent this morning.

ABB chief executive Morten Wierod said:

ABB has followed Rotork over many years, and we admire the execution excellence, engineering quality, and customer trust that Rotork teams deliver each day. We are convinced of the compelling strategic fit of the transaction.

It marks the latest in a string of UK-listed companies that have left the London Stock Exchange after agreeing to takeover deals.

Elsewhere this morning, the FTSE 100 energy group DCC said it received an improved offer from US buyout firm KKR and Energy Capital Partners. The terms of its earlier 5.7 billion pound bid (65.25 pounds a share in cash plus 1.47 pounds in dividends) are the same, but the consortium said it would add up to 125p in cash for each DCC share, using cash proceeds from the sale of DCC technology business, Nexora.

The consortium must confirm a firm offer for DCC or withdraw by 27 July.

European stock markets fall at the open

It is a downbeat open for European stock markets this morning - the UK blue chip FTSE 100 index has slipped 0.6 percent. The Stoxx Europe 600, which tracks the biggest companies on the continent, is down 0.1 percent.

The German Dax is down by about 0.1 percent and the French Cac 40 is down 0.2 percent.

Turning back to British Steel - business secretary Peter Kyle has said this morning that the government has nationalised the UK one virgin steel producer here in Scunthorpe because if this were to disappear, we would become at the mercy of international markets and the supply from other countries for the kind of production that goes into our railways and our construction.

When asked whether the plant blast furnaces would continue to produce virgin steel in the long term, he told Times Radio:

In the future, that will be a decision for this business and the government to decide going forward.
But it is the intention of the steel strategy that we move towards green steel. That is where the primary demand is into the long term, and I want to make sure that this plant is a modern plant that is producing the kind of steel that those companies and organisations purchasing steel require.

Warnings for Andy Burnham are coming in thick and fast as he prepares to take up the Labour leadership on Friday.

The chief executive of the CBI, Rain Newton-Smith, has said that there cannot be another summer of speculation, after Labour last two summers were dogged by leaks and speculation about what might come in Rachel Reeves autumn budgets.

Here is Heather Stewart full interview with Newton-Smith:

All eyes on Burnham as UK economic growth fragile

All eyes are now on Andy Burnham, economists are saying this morning, as he stands to inherit a fragile economy from Keir Starmer.

TUC general secretary Paul Nowak said:

Better growth in our economy is good news and essential for boosting jobs and incomes. But despite welcome improvements, the outlook remains uncertain - and up and down the country too many working people are still struggling to get by.
Donald Trump illegal war has sent energy prices through the roof - and comes after years of bills increasing sharply.
That is why the new prime minister must urgently show working people that this government is on their side by making living standards his number one priority.
That means cutting energy bills for most households - paid for by taxing banks eyewatering excessive profits. This common-sense step would put more money back in people pockets, give families the confidence to spend on the high street and support the economy.

Ben Jones, senior lead economist at the CBI, says businesses are still cautious about the outlook for the rest of the year.

Uncertainty over the policy outlook and the Autumn Budget, given the looming change in government, is likely to weigh on confidence and investment decisions. The renewed military strikes in the Middle East highlight the risk of further volatility in global energy and financial markets. Our own business surveys weakened in May and softened further in June, with private sector activity expected to remain subdued over the coming months.
With a new Prime Minister coming into office, the government must restore competitiveness by tackling the growing cost pressures that businesses are facing in every corner of the country. This must include taking direct action to lower the UK industrial electricity costs, which are currently 45 percent more expensive than the G7 median. Lowering industrial electricity costs will give businesses the confidence to invest and unlock stronger economic growth across the UK.

ONS director of economic statistics Liz McKeown notes that there was robust growth in the three months to May.

The economy recorded robust growth in the three months to May, though the pace eased slightly as the latest two months showed a weaker picture.
Services drove growth across the three months with computer programming and advertising again leading the way, while the often-volatile pharmaceutical industry also performed well.
This was only partially offset by another weak period for power generation, while architectural and engineering firms also contracted.
While all three main sectors grew over the three months, the slight growth in GDP in May was driven by services alone, with production and construction both falling back.

And a spokesperson for the Treasury has said in a statement:

We have the right economic plan which has put the UK in a much stronger position than two years ago with the fastest growth in the G7 in the first quarter and the OECD agreeing that we have restored stability.
We are forecast to be the fastest growing European G7 economy this year and next, inflation is steady, and for the first time since 2004, we are forecast to borrow less this year than the G7 average.

UK economy grew by 0.1 percent in May despite impact of Iran war

Heather Stewart

The UK economy grew by 0.1 percent in May, despite the impact of the Iran war on energy costs, official figures show.

The Office for National Statistics said GDP rose, following a 0.1 percent decline in April. The figures were in line with a 0.1 percent rise in May that economists had forecast.

Despite April dip, the economy appears to have been more resilient in the face of the Middle East conflict than some analysts had feared.

The International Monetary Fund recently upgraded its forecast for UK GDP growth for the year as a whole, to 1 percent, up 0.2 percentage points from its April forecast.

However, the UK economic outlook remains highly uncertain and oil prices have risen sharply again since hostilities resumed in the Middle East this week, underlining the economic challenges facing Andy Burnham as he takes over as Labour leader.

Introduction: British Steel taken into public ownership

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

British Steel has been brought under public ownership to protect the future of steel production in the UK, the government has said.

The steelworks, which employs about 2,700 people in Scunthorpe, was taken under operational control by the government in April last year after it emerged that its Chinese owner