The Government has published a Green Paper on the National Security and Infrastructure Investment Review, which will consider the national security implications of foreign mergers and acquisitions (M&A).

This proposes lowering the turnover threshold for M&A scrutiny from £70 million to £1 million in two specific sectors: the dual-use and military-use sector; and parts of the advanced-technology sector. This would allow greater Government examination of cases that could affect national security.

Longer-term reforms will then seek to ensure adequate scrutiny of whether significant investment in the UK’s most critical businesses raises any national security concerns, allowing intervention in circumstances where this might be the case.

The Government says its intention is not to affect access to new capital, and the UK will remain open to foreign investment, with the changes affecting only a small proportion of transactions.

However, UK companies active in the defence sector are more likely than most to be affected, and lowering the turnover threshold would mean SMEs finding themselves subject to scrutiny in any such situation.