The UK government has peddled back on its clampdown on foreign takeovers of British firms, raising the threshold at which such deals would face government scrutiny.

The National Security and Investment Bill had proposed that any foreign investment of more than 15% in a UK-listed company would have to be flagged to the Department for Business, Energy & Industrial Strategy.

However, this week the government tabled an amendment to the bill, raising that threshold to 25%.

The bill gives the government an opportunity to scrutinise possible national security implications of significant foreign investments and takeovers.

The change to the proposed law follows intense lobbying by the business community, including the Confederation of British Industry, which argued that the original lower threshold would cause delays and bureaucracy and so pose a threat to foreign investment in the UK.

The Times reported that business secretary Kwasi Kwarteng approved the amended threshold after being convinced by the business case. In a statement, the government said: “This change will ensure that the new regime is proportionate and as transparent as possible without reducing the government's intervention powers.”

The original 15% threshold would have led to up to 1,800 foreign investment deals requiring formal notification every year, according to the government’s own estimates. The new threshold of 25% will cut that figure significantly, though no fresh estimate of numbers is available.

The National Security and Investment Bill was launched following widespread concern over the scale of Chinese influence in UK business and industry, most notably plans for China’s Huawei to take a lead role in Britain’s 5G mobile telecoms network.

Huawei’s involvement was blocked by prime minister Boris Johnson, but there is still widespread concern among Conservative politicians regarding China’s potential involvement in UK industry.

The bill is currently in the House of Lords and is expected to pass into law later this month.