UK Government Reports on Investment Screening and National Security
The UK government has released its Annual Report on the National Security and Investment (NSI) Act, indicating that 95.6% of notifications reviewed were cleared to proceed without further action. During the reporting period from April 2025 to March 2026, the government intervened in nine transactions, either blocking them or imposing conditions. A total of 60 call-in notices were issued for more in-depth reviews, covering nearly all sensitive sectors, with a significant focus on Defence, which accounted for 47% of called-in acquisitions. Critical Suppliers to Government and Military & Dual-Use sectors each represented 33% of the reviews.
The NSI Act is designed to facilitate inward investment while allowing the government to safeguard national security. The report underscores the effectiveness and transparency of these powers, providing investors with the confidence needed to foster growth in the UK economy. Chief Secretary to the Prime Minister, Darren Jones, emphasized the government's commitment to national safety and the importance of protecting critical infrastructure and supply chains.
The report also noted a year-on-year increase in notifications, rising from 1,143 to 1,324. Despite this uptick, the government managed to make decisions on all notified acquisitions within the statutory 30 working days. Of the 1,220 notifications reviewed, only 4.4% were called in for further scrutiny, a figure consistent with previous years.
In terms of final orders, the government issued nine during this period, with acquirers from various countries, including the UK, China, Germany, and the United States. Notably, only one acquisition was entirely blocked, while the others were allowed to proceed under specific conditions. The majority of final orders were related to Advanced Materials, Data Infrastructure, and Military & Dual Use sectors.
Looking ahead, the government plans to refine the mandatory investment screening rules to enhance clarity for businesses. Following a 12-week consultation with industry leaders and legal experts, updates will include the removal of “off-the-shelf” AI from mandatory screening, focusing instead on firms that develop or modify advanced AI. Additionally, major water-operating companies will be brought into the scope of mandatory notifications, and semiconductors and critical minerals will be categorized separately from Advanced Materials.
These legislative updates aim to ensure that the UK’s investment screening system remains robust against evolving national security threats while promoting economic growth.
