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We discuss economic security against the backdrop of Iran’s reckless and dangerous attack against Israel�

� and six months since the terrorist outrage of October 7th with Hamas still holding innocent people hostage.

It has been over two years since Russia’s illegal invasion of Ukraine�

…meanwhile, China’s aggression in Xinjiang, the South China Sea, and Hong Kong demonstrates its disregard for the rules based order.

We have returned to substrata geopolitical competition - and tension - at levels not seen since the Cold War.

While we are not in open hostilities - we are in cyber and economic contestation with an increasing range of state and non-state actors.

At a time when the global economy is much more integrated�

� and our strategic competitors play a far more impactful role�

� our economic and security interests are intertwined as never before.

We have demonstrated our strength in the face of these challenges. 

We have restored stability after the twin shocks of Covid, and Russia’s illegal invasion of Ukraine�.

� and continue to create the conditions for business to flourish.

As the Deputy Prime Minister of a G7 country with the highest inward investment in Europe�

…the continent’s biggest tech sector�

…the biggest exporter of services after the US�

� and the world’s most competitive financial centre�

…I know we must be doing something right.

Inflation has been halved�

� real household disposable income is on the rise�

� and the pace of growth is increasing.

That is all testament to the Great British economic model which is the key to our long-term prosperity�

…a model based on open markets � free trade � and academic liberty�

…all underpinned by the rule of law.

But we must also be clear-eyed that one of the great strengths of our system - its openness - also brings vulnerabilities.

Covid, and Russia’s war in Ukraine both laid bare the interconnectedness of global supply chains�

…and the extent to which they can be exploited:

…Russia driving up the price of gas�

� Chinese acts of economic coercion.

Indeed, the CCP is seeking to make the world both increasingly dependent on China; whilst making itself less dependent on everyone else..

Meanwhile, our open economy is being targeted by state-based actors and their proxies.

Across our inbound and outbound investment flows, our imports and exports, and our academic collaborations�

� the whole spectrum of our economic security interests is under threat.

And the nature of these threats is evolving.

So as our protections increase in one area, new routes of attack emerge.

And so our response must evolve in kind.

Our toolkits may be actor agnostic. But, be in no doubt that, we, the leaders who wield these tools, are clear about where the threats are currently coming from.

In short, while the financial crash and pandemic exposed the economic risks of globalisation�

…today’s rising geopolitical competition is demonstrating the security risks behind such integration.

That confronts us with an active choice.

A careful balancing act between our freedoms, our prosperity, and our security.

There are those that see this simplistically�

…who advocate a move to a polarised world�

…where we detach ourselves from those who do not share our values, or who don’t play by our rules.

That is not the approach of the UK Government.

We will not decouple from the global economy. We will continue to default to openness. We must.

That is what generates growth, guarantees our prosperity, and enables us to invest in our security.

There is no greater source of resilience than a strong economy.

So while we won’t decouple; we must de-risk;

Our rules must constantly adapt.

And politicians need to be honest about how we are responding:

We have a plan, and I want to be open about that plan.

Fundamentally, we need to tighten our controls over the routes by which the UK plugs into the global economy�

� but in a way that allows investment and trade to flow as freely as possible.

Those routes are diverse and complex. So our corresponding response needs to be subtle and agile.

It starts with inbound investment.

A great source of prosperity and pride for our country.

I want to be crystal clear with our investment partners - the UK welcomes inbound investment, we are open for business, and my presumption will always be in favour of investment.

But if we allow money to flow into our country unchecked, we leave ourselves open to abuse. 

This is the area of economic security where we are most developed, thanks to the National Security and Investment Act.

Since coming into force, it has functioned well.

The government has reviewed over 1,700 notifications and issued 20 final orders.

Only 7% of notified transactions were called in for scrutiny, and only 1% were issued a final order.

So the vast majority of businesses have had zero interaction with the regime, nor do we want them to.

It typifies what is known as the small garden, high fence approach�

� safeguarding the UK against the small number of investments that could be harmful to our national security, while leaving the vast majority of deals unaffected.

That is not to say investment into sensitive areas is off limits�

…but it must be managed in a way that protects our national security at the same time as driving growth. 

Indeed � to extend the metaphor just a little further � just as important as the garden is the ground that surrounds it.

Beyond the fence should lie a vast and fertile landscape where trade and investment thrive.

So to tend to this, we are constantly monitoring the Act’s performance to ensure it stays ahead of threats, while remaining as pro-business as possible.

So today I have published the Government’s response to my recent Call for Evidence�

…setting out the important next steps we will take to fine tune the NSI system:

I will shortly publish an updated statement setting out how I use the powers under the Act�

…including what we are seeking to protect and how we assess risk.

And we will publish updated marked guidance, including how the Act can apply to academia.

We will also update the mandatory area definitions�

…including new definitions for critical minerals and semiconductors�

 and we will consult in the coming weeks.

And finally, we will consider targeted legislative exemptions from the Act’s mandatory notification requirements.

Likewise, when it comes to exports, we must ensure that the goods and technologies we sell overseas�

…are not being used to harm our own national interest, or in a way that runs counter to our values.

That is why we have an Export Controls regime, which we have significantly enhanced�

…responding specifically to risks around new technologies such as quantum.

Having reviewed the impact of these changes, we are confident we have a strong set of tools to prevent exports of concern.

But we do recognise that this stronger regime has posed challenges to a small number of UK exporters.

And really this is an indication of the trade-offs that the Government must navigate.

And so we will consult on improvements to our controls on emerging technologies.

We must ensure our system is flexible enough to deal with rapidly emerging threats�

…that cases are processed more quickly and efficiently�

� and that we maintain close collaboration with UK researchers and businesses.

We also connect to the global economy through the import of goods and services.

Again, we see deliberate attempts at weaponising import and export links through coercion �

…including trade restrictions by China against Lithuania and by Russia against Ecuador.

We have also seen examples where public sector procurement poses risks to national security�

…from surveillance systems…to telecoms infrastructure…each featuring increased capability and connectivity. 

That is why I banned Huawei from our 5G networks, and Chinese surveillance equipment from key Government sites.

It is not the role of Government to mandate sources of supply across the whole economy. 

We do, though, want business to be aware of the risks of excessive dependence�

…and where possible to work with us to reduce it.

And so we will continue to develop the UK’s Anti-Coercion Toolkit�

� including investing in civil service capability�

� increasing stress testing and exercising�

� with more security-cleared officials�

� and working with the G7 and other partners to tackle future threats.

But there is one further, more challenging, area of economic security�

…one that has concerned both us and our allies.

And that is outward direct investment.

Now of course the UK is a major source of global investment�.

…one of the few global financial centres.

UK investors hold 14 trillion pounds of assets overseas�

� in turn generating hundreds of billions of pounds annually.

Yet a careful review of the evidence suggests it is possible that a very small proportion of outbound investments could present national security issues.

Indeed, they might be fuelling technological advances that enhance the military and intelligence capabilities of countries of concern.

The data is limited, but over the next year we will engage with G7 allies and businesses to better understand this risk�

…and how our tools can mitigate it. 

In parallel we will evaluate whether further action is warranted.

We are launching a dedicated analytical team to assess the risk in sensitive sectors�

…and we will issue public guidance on how the existing NSI powers allow the Government to intervene in certain outbound investment transactions.

 And we are refreshing and enhancing the National Protective Security Authority’s ‘Secure Business� campaign.

So this is designed to ensure businesses can make better informed investment decisions. 

This plan of action is based on reassurance, protection, and engagement�

…giving British business the clarity and coherence they need to plan and to thrive.

We are not seeking to dampen animal spirits�

…instead we aim to be precise, proportionate and coordinated. 

It is why I launched the public-private forum on economic security last year�

…and why we put businesses at the heart of devising the National Cyber Security Centre, the National Protective Security Authority and the Investment Security Unit.

And we will continue to iterate that support�

…in particular helping smaller businesses to engage with government.

I can announce that today the NPSA and NCSC are launching  a new tool�

� to help small tech businesses and university spinouts assess and improve their security.

Finally, we are coordinating closely with our universities. 

Our academic base is a jewel in our crown�

…with four of the world’s top ten institutions.

Just as openness has been crucial to our economic success�

…internationalism has been vital to our academic prowess.

The vast majority of that collaboration is to be welcomed and applauded. 

We should be proud that much of the cutting-edge development in sensitive technologies is happening at our universities. 

But this also has the potential to become a chink in our armoury.

This is not about erecting fences around entire institutions or areas of research. 

However, it is right that we look at who has access to research frontiers in the most sensitive disciplines. 

Similarly, we must ensure that some universities� reliance on foreign funding does not become a dependency by which they can be influenced, exploited, or even coerced.

Or indeed, find themselves vulnerable in the fallout from heightened geopolitical tensions.

That’s why the government has been conducting a review into academic security�

� and I will be convening a round-table of university Vice Chancellors in the coming weeks to discuss our findings�

…and our proposed response. 

In all of this, we do not act alone.

We are working with our allies around the world�

…evolving our trading relationships into economic security partnerships, such as  the Atlantic Declaration with the United States�

…and the G7 Coordination Platform on economic coercion.

Together, we will succeed in protecting our national security by safeguarding our economic security.

Because what unites us � unlike our adversaries � is our values. 

Our societies prize innovation, ideas and the successes of individuals.

We celebrate what we can make � not what we can take. 

We know that a creative, open, outward-facing economy is a strong economy�

…and that a strong economy makes us all more secure.

In these uncertain times, that economic model must adapt and respond to new threats�

…but it must also remain true to the principles which have yielded prosperity, opportunity and security in the past.

Our prosperity and our security are two sides of the same coin.

We do not make ourselves more secure by being less open�

Instead we redouble our efforts to make our open market as secure as possible.

And in doing so we safeguard the United Kingdom’s position as the best place in the world �

…to invest �

…to study �

…to trade with�

…to live�

� and to prosper.

And long may that continue.