Economic Security

Thursday 18th April 2024 Written Statements

[The Chancellor of the Duchy of Lancaster and Secretary of State in the Cabinet Office (Oliver Dowden)]

Today, I am setting out a series of new steps to boost the UK’s economic defences and enhance the capabilities of the Government to respond to economic security threats.

The openness of the UK economy is a reflection of our values, the driver of our prosperity and that which distinguishes us as democracies. As the integrated review refresh set out last year, we are experiencing rising geopolitical competition alongside a more integrated global economy in which our strategic competitors play a far greater role. Our economic and security interests are intertwined as never before, and as we continue to promote the many benefits of an open economy, we must also protect ourselves from the vulnerabilities which arise from this openness.

In order to respond to the rapid evolutions in emerging technologies and to keep our export control toolkit up to date, the Department for Business and Trade will shortly be consulting on steps to strengthen our work with UK academics and businesses to ensure we can respond quickly to cutting-edge developments. We have also been reviewing our recently enhanced military end use control. The Department for Business and Trade will be providing more details on the outcome of this review. We are confident we have a robust regime, supporting human rights and national security objectives while helping our business to grow. We do however recognise that enhanced controls have an impact on UK exporters, and we are keen to make sure decision making for business is as timely and transparent as possible.

The ability of UK companies to seek growth and opportunity by investing overseas is a fundamental source of our economic strength. However, the Government recognise the potential for a small number of outward direct investments to be of national security concern through fuelling technological advances that enhance military and intelligence capabilities of countries of concern. The available data is extremely limited, meaning that evidence of this risk is scarce in the UK. Over the next 12 months, we will engage allies and businesses to better understand and assess this risk and how HMG’s existing tools can mitigate it. In parallel, we will evaluate whether further action is warranted. We will also provide public guidance on how the existing powers in the National Security and Investment Act 2021 allow the Government to intervene in certain outward direct investment transactions. We will update the National Protective Security Authority’s “Secure Business” campaign to ensure businesses can make informed investment decisions and are aware of these risks.

I am also publishing the Cabinet Office’s response to the call for evidence on the NSI Act, which ran between November 2023 and January 2024. The Act continues to function well, but the Cabinet Office will bring forward updates to fine-tune the system to ensure it stays ahead of the threats facing the UK, and remains as pro-business as possible, without compromising the Government’s ability to conduct proper scrutiny and protect our national security. This includes considering a small number of targeted exemptions from the Act’s mandatory notification requirements, the publication of further guidance, and a new consultation on updates to the mandatory area definitions, which set out the areas of the economy subject to the NSI Act’s mandatory notification requirements.

[HCWS415]