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Tata Steel Says UK Green Policy Threatens Industry Base

Tata Steel, one of Britain’s largest electricity users, says UK green policies are putting it at such a disadvantage to its rivals in Europe that its future operations are likely to be affected.

In a sign of the fresh industry push gathering against environmental levies ahead of the March 21 Budget, Karl-Ulrich Köhler, head of the Indian group’s European business, said Tata’s UK plants were paying up to 50 per cent more for their electricity than were sites in countries such as France, Germany and the Netherlands.

The main reason was that the UK lagged behind other countries’ efforts to cap or ease the burden of renewable energy incentives on industry, he said, handing a big advantage to Tata’s rivals.

“The order of magnitude of this disadvantage compared to our peers is in the region of £5 per tonne of steel. For us to achieve the same amount of savings we would have to cut about 2,000 jobs,” he said, or roughly 10 per cent of its UK workforce.

The company had no plans to cut jobs, he added, and its parent was committed to investments such as the £240m being spent at its Port Talbot plant in south Wales. But it was unclear how long that support would last if the “dangerous distortions” of UK environmental policies remained.

“In an international group you can decide where to allocate your investments,” he said. “If an investor or an industry faces a strong disadvantage in region A and a comparative advantage in region B, it goes without saying what happens over time: it erodes positions.”

He added: “Our biggest competitors are sitting right on the other side of the Channel and this regime gives them a material competitive advantage.”

The Department of Energy and Climate Change said the government had taken “decision after decision” to ensure energy consumers paid no more than necessary to lower carbon emissions.

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Shock industrial output fall raises UK recovery fears

LONDON, March 9 (Reuters) – British industrial and construction output suffered a shock fall in January, raising the risk the economy will slide back into recession at a time that rising oil prices are posing a dilemma for policymakers.

Friday’s data from the Office for National Statistics will put extra pressure on finance minister George Osborne to find measures to boost growth as he prepares to unveil his 2012 budget on March 21, and may raise the chances that the Bank of England will extend its asset purchase programme in May.

Industrial output shrank by 0.4 percent in January, wiping out December’s gains and confounding economists’ forecasts for a 0.3 percent rise. None of the economists polled by Reuters had expected a fall this month after a string of upbeat private-sector surveys, and the annual decline of 3.8 percent was the biggest in more than two years.

“Today’s disappointing industrial figures … suggest that the manufacturing recovery is already starting to lose steam,” said Capital Economics’s Samuel Tombs.

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