(Adds comments from lawyers, business secretary)
LONDON, Oct 17 (Reuters) - Britain wants more say over deals in its military and technology sectors, as the government tries to prevent homegrown companies in sensitive industries from falling into foreign hands.
The proposals, announced on Tuesday as part of a broader consultation on potential changes to takeover rules, mark a shift for a country which has traditionally been one of the most open to foreign buyout deals.
That emphasis has changed, with a string of acquisitions by Chinese companies across the world fuelling security concerns in countries including Germany and the United States.
"At first sight we have concerns that these proposals will have a chilling effect - the opposite of the 'UK open for business' message which accompanies them," said Angus Coulter, partner at law firm Hogan Lovells.
The weakening of the pound since Britain's vote to leave the European Union has also made UK companies cheaper for foreign buyers.
Theresa May, who became prime minister after the Brexit vote, said last September that her government would take a more cautious approach to foreign investments after approving a $24 billion plan for a Chinese-backed nuclear power plant in southwest England.
Since then though there have been a number of other high profile foreign takeovers in Britain, particularly in the technology sector.
In September, Canyon Bridge Capital Partners - a China-backed buyout fund that was barred a week earlier by U.S. President Donald Trump from buying a U.S. chipmaker - agreed to buy British chip designer Imagination Technologies, sparking criticism from some politicians and media of the UK's relaxed rules..
"It is the first duty of government to make sure that we are protected from hostile threats," Business and Energy Secretary Greg Clark said at a Q&A session after his parliamentary statement. "It is right to periodically upgrade our systems for scrutiny and .... smaller companies have the potential to carry a threat to national security and these measures respond to that."
The proposals include lowering the turnover threshold at which the government can scrutinise deals to companies with annual revenues of at least 1 million pounds ($1.3 million), from 70 million previously.
The proposed changes would apply to companies in the military sector and those involved in the design of computer chips and quantum technology.
"This will mean that investment from certain countries will be looked at much more closely and inevitably when politicians are involved in transactions, it will increase uncertainty and a lack of predictability and, depending on how the system works, maybe a question mark over transparency," said Nigel Parr, partner at law firm Ashurst.
The world's fifth-largest economy is trying to balance the need to remain open for investment after the Brexit vote while upholding a pledge by Prime Minister Theresa May to intervene when big foreign investments concern critical assets.
Since the Brexit vote in June 2016, Britain has remained a busy market for mergers and acquisitions, with the value of deals up 26 percent so far this year to $125 billion, Thomson Reuters data shows.
Some lawyers said these new proposals would not have made much difference to this recent pick-up in deals though, questioning the long-term need for them.
"We are not aware of a significant number of 'problem' transactions which the government has been unable to review under existing rules. There is a general question of whether there is a need to impose extra cost on business and government, and whether now is the right time to do so," Hogan Lovell's Coulter said.
The government also said it would open a twelve-week consultation period on longer-term reform proposals, including an expanded version of the "call in" power that allows the government to scrutinise a broader range of transactions for national security concerns. ($1 = 0.7548 pounds)
(Reporting by Anjuli Davies, additional reporting by Clara Denina; Editing by Mark Potter and Louise Heavens)