Investment Screening Powers: Safeguarding National Security While Fostering Economic Growth

The Annual Report on the National Security and Investment Act reveals that 95.6% of notifications assessed were permitted to proceed without any further action, thereby minimising the regulatory burden on businesses. During the latest reporting period, the government received 1,324 notifications, marking a 16% increase from the previous year. The interventions covered a wide spectrum of global investment sources, with final orders and detailed reviews involving transactions linked to the UK, China, Germany, the United States, and the United Arab Emirates, among others.

Government Actions on Transactions

Between April 2025 and March 2026, the government intervened to block or impose conditions on nine transactions, while nearly all other notifications submitted under the National Security and Investment (NSI) Act were cleared, as detailed in the report released today. Over the course of the year, a total of 60 call-in notices were issued for more thorough reviews of various transactions. These acquisitions spanned nearly all sensitive sectors, with call-in notices being issued for 16 out of the 17 areas of the economy that require mandatory notification.

The Defence sector was the primary focus of these reviews, accounting for 47% of called-in acquisitions. This was closely followed by Critical Suppliers to Government and Military & Dual-Use sectors, each representing 33% of the reviewed cases. It is important to note that some acquisitions may be linked to multiple sectors.

Balancing Investment and National Security

The NSI Act is designed to facilitate the flow of inward investment while granting the government the authority to intervene when national security is at stake. The latest findings illustrate that the government is utilising these powers effectively and transparently, providing investors with the assurance needed to foster growth across the UK. Chief Secretary to the Prime Minister, Darren Jones, emphasised the government’s commitment to safeguarding national security and critical infrastructure.

Jones remarked, “The first duty of any government is to keep our nation safe, which is why we are committed to protecting the UK’s national security and safeguarding our most critical infrastructure and supply chains. Data from this year’s report shows our investment security powers are working effectively. We are taking firm, targeted action to protect our national security while ensuring that the vast majority of legitimate investments are cleared quickly to promote economic growth and innovation.”

Trends in Notifications and Review Outcomes

The report indicates a year-on-year rise in the number of notifications received, increasing from 1,143 to 1,324. Despite the heightened volume, decisions were made regarding whether to call in or clear all notified acquisitions within the statutory 30 working days of the review period. Of the 1,220 notifications reviewed this year, 95.6% were cleared to proceed without further action, while only 4.4% were subject to additional scrutiny, a ratio that remains consistent with previous years.

To address national security risks, the government issued nine final orders during this reporting cycle. These interventions encompassed a diverse array of investment origins, including acquirers from countries such as the UK, China, Germany, and the United States. Given that transactions may involve multiple acquirers, a single acquisition can be associated with more than one investment origin. Notably, the highest number of final orders involved acquirers connected to China, with three such orders issued.

Refinements to Investment Screening Rules

Among the final orders issued, only one acquisition was entirely blocked; the remaining orders permitted the transactions to proceed under specific conditions. The NSI Act applies uniformly to all acquirers, ensuring a proportionate, evidence-based, and robust defence of UK national security. The most significant number of final orders pertained to the Advanced Materials, Data Infrastructure, and Military & Dual Use sectors. Acquisitions related to Defence, Critical Suppliers to Government, and Military & Dual Use were notably prominent among those called in for detailed assessment.

This year, the government announced intentions to refine mandatory investment screening regulations to enhance clarity for businesses. These updates follow a comprehensive 12-week consultation with industry leaders, legal experts, and trade organisations. The refinements aim to keep mandatory notification rules current, including the exemption of “off-the-shelf” AI from mandatory screening and focusing instead on firms that develop or modify advanced AI. Additionally, the updates will bring major water-operating companies under scrutiny while separating semiconductors and critical minerals into distinct categories, thus enhancing clarity.

The government plans to introduce secondary legislation in Parliament to effect these updates and to exempt other lower-risk activities, such as internal reorganisations, from mandatory notification, ensuring that the UK’s screening system remains both pro-growth and resilient against evolving national security challenges.