British Steel is launching a consultation that could see the closure of its two blast furnaces at Scunthorpe, putting up to 2,700 jobs at risk out of a workforce of 3,500.

The company said the blast furnaces were “no longer financially sustainable” due to tough market conditions, the imposition of tariffs and higher environmental costs.

The British Steel was expecting a £1bn injection of government money to keep the business going, but was offered £500m.

Business Secretary Jonathan Reynolds said the government would “continue working tirelessly to reach an agreement with the company’s owners to secure its future”.

The leader of the British opposition Kemi Badenoch tweeted:

‘This is devastating news for Scunthorpe, but inevitable with the high energy costs forced on domestic industries by the ideological pursuit of net zero 2050’.

‘Labour attacked my deal to preserve the steelworks at Port Talbot, saving 5,000 jobs. Now they offer only broken promises and warm words for steel workers in Scunthorpe. Shameful’.