The UK government is reportedly set to scale back its powers to scrutinise and block foreign takeovers, less than two years after they were introduced.

In an interview with the FT, deputy prime minister Oliver Dowden said he would be launching a nine-week consultation today (13 November) aimed at "narrowing and refining" the National Security and Investment Act.

The powers were introduced in January 2022 to allow the government to address security concerns around foreign takeovers of companies with national significance.

The act requires the mandatory notification of proposed acquisitions in 17 different areas of the economy, such as defence, quantum technologies and AI.

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However, these areas of coverage are likely to be scaled back, with Downden saying AI is becoming "ubiquitous" across the entire economy and "an awful lot of that is going to have very little national security implications".

Instead, the regulations will focus on "high-end" AI that could have a military "dual use", or AI tech that could "enhance an adversary's capabilities or diminish ours".

In the interview, the deputy prime minister said he wanted to ensure "government regulation keeps up with the dynamism of the private sector" and that the state applied "as little regulatory burden as necessary".

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"We cannot have yesterday's regulation for tomorrow's world," he said.

Last year, the act was used to block the sale of semiconductor manufacturer Newport Wafer Fab to Chinese-owned Nexperia.

In the last audited year, the government was notified of 866 acquisitions, of which 65 were subject to further assessment and 14 saw intervention, 40% of which involved companies or investors from China, the FT said.