The business and energy secretary Greg Clark announced on Tuesday the government would be able to intervene in mergers that raise national security concerns, even when they involve smaller businesses.
This would cover export controls and companies involved in the design or manufacture of computer chips and quantum technology.
The government can currently intervene in mergers involving companies with a UK turnover of more than £70m, but this will change to a threshold of £1m.
The new rules will be up for consultation for four weeks from today.
Clark said, “It is right that every so often the government reviews its mergers regime to close loopholes where they arise and this is what these proposals do in the area of national security.
“No part of the economy is off-limits to foreign investment and the UK will continue to be a vociferous advocate for free trade.”
Clark also said the department was consulting on proposals for better scrutiny of transactions that could raise national security concerns such as espionage or sabotage.
These proposals would include a mandatory notification regime for foreign investment in parts of the economy critical to national security, as well as new powers allowing the government to scrutinise a broader range of transactions for national security concerns within a voluntary notification regime.
This consultation is being launched today and will last twelve weeks.