Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance,

examining events occurring in markets right now and financial history to see what lessons can be taken away,

including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

The British government is on the verge of agreeing to an almost $800 million bailout for Jingyi Group,

the Chinese owners of British Steel. Rishi Sunak's government already agreed to an almost

$700 million subsidy for Indian-owned Tata steel if they replaced their two remaining

UK-based blast furnaces with more environmentally friendly electric arc furnaces. These are two

of the largest state support packages in British

history. The outgoing Conservative government didn't sign the Tata deal before the recent

election and the new Labour government has now said that they will make job guarantees

a requirement of any state support package offered to Tata Steel.

Last year, the British government offered $700 million in subsidies to Tata, the owner of

Jaguar Land Rover, to persuade them to build a new battery plant in the UK. They agreed to

$100 million in subsidies for German-owned BMW to continue building

the electric mini in the UK and $100 million to Nissan to safeguard the Japanese-owned company's

future in the UK. Do these bailouts and subsidies to foreign-owned companies make any sense for British taxpayers?

And if they are paid, can taxpayers expect these companies to stop coming back for more government handouts

by threatening layoffs again in the future?

Many foreign-owned companies do ask for and get subsidies, but the steel industry is possibly

the most interesting of this group because governments around the world worry about losing

their steel industries, both for fear of losing manufacturing jobs and for strategic military

reasons. The American Iron and Steel Institute, for example, highlights on its website that all segments of the American steel industry contribute to the defence industrial base.

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