UK firms may be barred from funding emerging tech in hostile countries

Oliver Dowden said on Thursday the government would consult on curbing British investment abroad, after becoming concerned that money from the UK could be used to finance projects that could undermine national security.

His comments come eight months after the Biden administration gave regulators the power to stop US investment in Chinese institutions in three sectors: semiconductors, quantum computing and artificial intelligence.

In a speech at the Chatham House thinktank, Dowden said: “A careful review of the evidence suggests that it’s possible that a very small proportion of outbound investments could present national security issues.

Pushed to say which countries he would consider a risk, the deputy prime minister said: “We set out into the integrated review refresh that China was the number one state-based threat to our economic security.

The government has shifted its stance towards Chinese technology in recent years amid growing international concern that equipment supplied by companies such as Huawei could be used for espionage.

The deputy prime minister singled out universities as particularly at risk of being manipulated by foreign governments, both because their researchers were likely to be targets and because academic institutions were so open to international investment.