UK investment screening clears most deals as government tightens national security oversight

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UK investment screening clears deals

Highlights

95.6% of the 1,220 reviewed UK investment notifications are cleared, with only nine deals blocked or conditionally approved between April 2025 and March 2026.
Notification volumes rose 16% to 1,324, with defence comprising 47% of called-in cases and interventions spanning acquisitions linked to multiple countries and sensitive sectors.
Proposed rule changes would exempt off-the-shelf AI, add water companies, separate semiconductors and critical minerals, and exclude lower-risk internal reorganisations from mandatory screening.

Annual report outlines review volumes and interventions

As reported by GOV.UK, the National Security and Investment Act annual report published today says 95.6% of the 1,220 notifications reviewed over the year are cleared to proceed with no further action, while 4.4% are called in for closer examination.

The government says it receives 1,324 notifications in the reporting period, up 16% from 1,143 a year earlier. It also issues 60 call-in notices and says all notified acquisitions receive a call-in or clearance decision within the statutory 30 working days.

Nine transactions are either blocked or allowed to proceed with conditions between April 2025 and March 2026. Only one acquisition is blocked outright, while the remaining final orders permit deals to continue subject to remedies intended to address national security risks.

Interventions cover acquirers associated with the UK, China, Germany, the United States and the United Arab Emirates, among others. The government says the regime applies equally regardless of investor origin and is designed to provide a proportionate, evidence-based response.

Rule changes target clarity for business and sensitive sectors

Defence accounts for 47% of called-in acquisitions, making it the largest area of concern in detailed reviews. Critical Suppliers to Government and Military & Dual-Use each account for 33%, while call-ins span 16 of the 17 sensitive areas covered by mandatory notification rules.

The largest number of final orders relates to Advanced Materials, Data Infrastructure and Military & Dual Use. The report says acquisitions can be linked to more than one part of the economy and may also involve multiple acquirers, which can affect how investment origin is recorded.

The government also says it plans to refine the mandatory screening framework after a 12-week consultation with industry leaders, legal experts and trade bodies. Proposed changes include removing off-the-shelf AI from mandatory screening, bringing major water-operating companies into scope, and creating separate categories for semiconductors and critical minerals.

Ministers intend to lay secondary legislation in Parliament to implement the updates and to exempt lower-risk activities such as internal reorganisations from mandatory notification. The government says the changes are meant to keep the regime supportive of growth while adapting to evolving national security threats.

Our earlier coverage of the suspension of CMMC Phase II explained that U.S. defense contractors—especially small suppliers—received temporary relief after officials paused the next compliance step due to high administrative and financial burdens. We noted that the review aims to keep cybersecurity protections in place while reducing barriers to participation, amid concerns about limited assessor capacity and potential disruptions to the defense supply chain.

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