Tata Steel has warned that the finances of its UK business face ‘material uncertainty’ given a lack of government investment, as well as challenging market conditions.

The steelmaker said a stress-test of its European arm to assess the impact of a downturn had flagged concerns for the UK unit, however, it added that it expected trading to pick up later this year.

The Department for Business said the UK government is providing support to protect the steel industry from 'unfair trade and energy costs'.

The UK business of India's Tata Steel employs about 8,000 people, with half at the Port Talbot steelworks in Wales.

In results published last week, Tata said that earnings at Tata Steel Europe - which includes the UK business - fell by more than 60% between last year and 31 March.

The company added that it had carried out tests to assess the potential impact of an economic downturn in Europe, given factors such as higher inflation and interest rates.

These tests found the outlook for the UK business would be ‘adversely impacted’, but Tata stated it was continuing to ‘implement various measures aimed at improving its business performance and conserving cash’.

The company is still in talks with the UK government over support to switch away from existing steelmaking processes to ones that emit less carbon.

Source: yahoo!News