Failure to find a buyer for Tata Steel's UK business could lead to 40,000 job losses in Britain, a leading think tank said today.
The IPPR warned the total figure was likely to be higher, when reduced spending from unemployed workers hits demand in local economies. This could result in more business closures and job losses outside of the steel sector.
The think tank said that Tata's UK business employs 15,000 people, and it estimates a further 25,000 jobs in the supply chain depend the company's steel plants. However, it did say some supply chain job losses were likely to be outside of the UK.
It comes after Tata confirmed overnight plans to sell off its UK assets, putting the UK steel sector in its death throes.
Earlier today, business minister Anna Soubry told BBC Radio 4 that the government would be prepared to temporarily prop up the steelworks, but not buy it. She said it must ensure any help does not fall on the wrong side of state aid rules.
The government is worried Tata could seek to close the plant within weeks if a buyer is not found.
"British steel is facing extremely difficult trading conditions with slowing demand for steel from China having knock on effects for the industry right across the world," Alfie Stirling, IPPR research fellow, said.
"In addition there is currently significant state investment in new steel facilities and plants from regions that are traditionally net importers of steel, such as North Africa and South East Asia."
"Combined with existing excess capacity in Europe, the US, Russia and China, this is widening the gap between the amount of steel the world can make and the amount it actually needs."