UK National Security and Investment Act: key trends in the latest data ahead of upcoming reforms and a new Prime Minister

2025/26 Annual Report shows rising volumes of deals under review across a broad spectrum of sectors and acquirers, with a shift in focus for remedies

The UK Government’s latest Annual Report provides a snapshot of how the national security investment screening regime was operating in the most recent reporting year (1 April 2025 – 31 March 2026).  Headline trends are:

1. Notification volumes continue to climb: in 2025/26, notifications to the Government’s Investment Security Unit (ISU) rose by 16%, following a 25% jump the previous year. This sustained upward trend pushed annual reviews past 1,300 notifications, which causes inevitable pressure on resources and some delays to investor timelines.  The figure underscores the wide reach of the UK regime; while its scope is unlikely to narrow, planned exemptions for lower risk transactions – such as certain internal reorganisations – should help moderate future growth.
2. More transactions subject to in-depth assessment: consistent with previous years, only a small proportion of deals (4-5%) are “called-in” for in-depth review.  However, as overall notifications rise, a larger number of transactions face the extended timelines and elevated execution risk that follow a call-in.  Pressure on the Government to enhance transparency and predictability regarding the types of transaction that trigger further review is therefore likely to continue.
3. The number of deals subject to remedies has held fairly steady year-on-year: the Government issued nine final orders in 2025/26 – down from 17 in 2024/25 but up from five in 2023/24. The vast majority of remedies continue to be behavioural conditions on the parties, for example to protect sensitive assets, data and contracts.  Only one deal was blocked in the 2025/26 reporting period: a joint venture that involved the potential transfer of dual-use graphene assets to a Chinese company. More recently (and after the reporting period), the Government blocked the sale of a UK communications company that provides technology to the emergency services to a buyer with links to the Chinese government.   
4. Core sectors continue to face the highest levels of scrutiny: while the scope is broad – with call-in notices issued in 16 of the 17 mandatory sectors – scrutiny remains concentrated in certain areas.  In terms of call-ins, Defence leads (47%), followed closely by Critical Suppliers to Government (33%) and Military and Dual-use (33%).  This trend is expected to persist as the Government drives defence investment and the expected new Prime Minister (Andy Burnham) signals reindustrialisation through defence and other sectors as a core priority.
5. However, the sectors facing remedies have shifted from Defence to high-value inputs and infrastructure:  of the nine final orders imposed in 2025/26, five involved the Advanced Materials sector and three targeted Data Infrastructure.  This is a notable departure from the prior year when Defence and Military and Dual-use sector led the final orders, and is perhaps unsurprising given the Government’s strategic focus on building domestic resilience in high-growth tech sectors through critical inputs (such as semiconductors) and digital infrastructure (such as data centres).  Continued focus on these sectors is set to continue as upcoming reforms will establish semiconductors as a standalone mandatory sector and update Data Infrastructure to bring all third party operated data centres in scope of mandatory review.  Boosting sovereign capabilities in the “tech of the future” is also a stated objective of Mr Burnham’s.
6. Buyers from all jurisdictions face scrutiny under the UK’s nationality-agnostic regime: consistent with previous years, the largest number of final orders involved acquirers from the UK (five), followed by China (three) and then acquirers from traditional “low-risk nations” (Germany, the US and Canada).  This confirms the long-standing position that “target risk” alone can lead to intervention and remedy.  Notably, however, all deals that have been blocked or unwound so far (8 in total) have involved acquirers associated with China or Russia. 

Looking ahead – upcoming reforms and a change of political leadership will continue to shape the regime in 2026 and beyond

In March 2026, the Government announced a package of reforms designed to update the sectors of the economy subject to mandatory notification and free-up low risk investments (see our earlier blog - here – for more details). 

The changes include:

• a wider net for critical infrastructure sectors (notably water and data centres), updates to AI (to focus on firms that develop or modify advanced AI) and clearer, standalone sectors for critical inputs (semiconductors and critical minerals); and
• exemptions for certain internal reorganisations and the appointment of liquidators, special administrators and official receivers.

These reforms are expected to be implemented by secondary legislation, with timing largely influenced by parliamentary time. 

As the UK’s expected next Prime Minister prepares to enter office, early signs are that growth and resilience of core industrial and technology sectors will continue to be a priority, with potentially more enforcement under the regime to boost sovereign capabilities and reduce foreign dependencies. 

As the Government implements the reforms that have already been announced, and undergoes a change in leadership, any indications of a shift in focus for investors will be closely watched. 

If you would like to discuss this update in more detail, please get in touch with the authors or reach out to your usual Freshfields contact. For broader insights on developments in foreign investment reviews globally, see our latest Foreign Investment Monitor report.