Government to protect key British firms from foreign takeovers that raise national security concerns

Key British companies would receive protection from foreign takeovers where deals raise national security concerns, under new proposals announced by the Government on Tuesday.

Greg Clark said the new rules will allow the state to take action when deals involve companies that "design or manufacture military and dual use products, and parts of the advanced technology sector".

Liberal Democrat leader Sir Vince Cable said that the Government's green paper was "a case of too little too late".

The scope of the proposals must be widened, "to properly defend Britain’s entire science base, not just a narrow subset of businesses in the military and computer hardware sectors", he said.

“In recent months, several of our high-tech companies have been snapped up by foreign competitors taking advantage of the cheap pound," Mr Cable added.

Ahead of a consultation on the plans, Mr Clark said: "No part of the economy is off-limits to foreign investment and the UK will continue to be a vociferous advocate for free trade and a magnet for global talent."

Currently, the Government can only intervene in mergers involving companies with a UK turnover of more than £70m, or where the share of UK supply increases to 25 per cent or over.

The proposals aim to "close these loopholes" to enable "greater scrutiny of foreign investment in a changing market".

If enacted, the rule change will see the Government lower the threshold whereby ministers can scrutinise investment to businesses with a UK turnover of more than £1m, and remove the 25 per cent requirement.

The changes will widen the scope of current powers to include smaller businesses.

The Government is also consulting on longer-term proposals that will allow for better scrutiny of transactions that may raise national security concerns - this could include increasing risks of espionage, sabotage or the ability to exert inappropriate leverage.

Last year, UK tech firms including chip manufacturer ARM and flight comparison site Skyscanner were snapped up by foreign buyers.

Additional reporting by PA