Thousands of jobs are at risk after Britain's second-largest steel producer, British Steel, went into liquidation following a refusal of emergency government funding.

The company's slide into insolvency has been blamed on a slump in orders largely caused by the ongoing uncertainty over Britain's departure from the European Union, which has so far been delayed twice, and is currently scheduled for Oct 31.

UK Business Secretary Greg Clark said he is working on a rescue plan for the company, which would see the government team up with a consortium of private companies, some of whom he said have already made contact with the government.

Among those linked with potential investment are Chinese steel group Hesteel and UK-based private equity fund Endless, which lost out to private equity firm Greybull when it bought the company from India's Tata Steel in 2016 for just 1 pound ($1.26) and rebranded it as British Steel.

However, a senior government source has been quoted as saying: "Everything we've heard is (that the) chances of finding a buyer are low."

The government has tried to do what it can to support British Steel, including UK railway infrastructure maintenance company Network Rail reportedly having placed a year's worth of orders with the company to give it a cash injection.

However, the wider economic climate and in particular Brexit have proved too much.

"There are a number of reasons why the turnaround has been very badly blown off course but the main one is Brexit," Greybull's managing partner Marc Meyohas told the Financial Times.

Ironically, two of British Steel's largest UK facilities are in areas that voted Leave in the 2016 referendum. Port Talbot, in South Wales, voted 56 percent to 44 percent to leave, while the North Lincolnshire region, where the Scunthorpe steel plant is located, backed leave 66 percent to 34 percent.

In the run-up to the referendum, vocal Leave supporter Nigel Farage, who now heads up the newly established Brexit Party, tweeted: "If we vote to Remain on June 23 it is the end of the steel industry in this country. Simple as that. We must Leave."

The company also has facilities in the northeast of England, where the local Chamber of Commerce Chief Executive James Ramsbotham called the latest news "devastating" for both the region and the country and a "gross misjudgement" by the government.

"Steel is a strategic industry and an integral part of the UK supply chain and ending our ability to produce steel leaves us at the mercy of overseas producers," he said.

Labour Party leader Jeremy Corbyn also called for government action, saying it was an "outrage that the government has again failed our steel industry putting 5,000 jobs at risk at British Steel and 20,000 more in the supply chain."

The government is being criticized from both sides for what it may or may not do in the current situation.

While Labour and the unions want intervention, critics on the right are demanding to know why the company received 120 million pounds of funding in the last few weeks, although Clark says this money will be repaid as it is secured against European carbon credits.

Until the situation becomes clearer, staff wages will be paid by the official receiver who will oversee the liquidation process along with accountancy company EY.