The move tears up a 20-year partnership with the Chinese company. It has already provoked an angry response from Beijing, which said on Wednesday that it would do everything necessary to protect its interests. China also warned the decision would deter future investment by its companies.
"The way you are treating Huawei will be followed very closely by other Chinese businesses," China's ambassador to the UK, Liu Xiaoming, said during a press conference. "The mutual trust was undermined. It will be very difficult for businesses to have the confidence to have more investment."
Britain had been cozying up to Beijing in recent years. It was the first major Western economy to join China's rival to the World Bank, the Asian Infrastructure Investment Bank, in 2015. Former Prime Minister David Cameron aggressively courted investment from China, including in a new generation of nuclear power stations.