Following intense pressure from the US on its European allies to boycott the use of Huawei products in the rollout of next-generation 5G products and shut out the Chinese telecom giant from local markets, Germany was the first nation to rebuke Washington, with Handeslblatt reporting last week that the German government wanted to avoid excluding products offered by Huawei.

Now it's the UK's turn.

In the latest "serious blow" to US efforts to persuade allies to ban the Chinese supplier from high-speed telecommunications systems, the FT reported that the British government has concluded that it can "mitigate the risk from using Huawei equipment in 5G networks."

According to the report, the UK National Cyber Security Centre has determined that "there are ways to limit the risks from using Huawei in future 5G ultra-fast networks" and in doing so it is ignoring escalating US efforts to persuade countries to bar Huawei from their networks on the basis that it could help China conduct espionage or cyber sabotage.

The NSA has been sharing more information with allies and partners to underscore the risks, but as reported previously, several European countries, including the UK and Germany, have not been convinced that a ban is warranted.

The unprecedented rebuke of the US official stance would “carry great weight” with European leaders, not only because the UK has access to very sensitive US intelligence via its membership in the Five Eyes intelligence sharing network, but because it is a clear refusal to comply with implied but stern diplomatic demands by the US placed on European nations to further isolate China from its main export market.

"Other nations can make the argument that if the British are confident of mitigation against national security threats then they can also reassure their publics and the US administration that they are acting in a prudent manner in continuing to allow their telecommunications service providers to use Chinese components as long as they take the kinds of precautions recommended by the British,” the person said.

The US argues that 5G will be so fast — and have so many military applications — that the risk of using any Chinese telecoms equipment is too high. American officials have also made the case that, although there may be no evidence of nefarious activity so far, Huawei could use malign software updates to facilitate espionage

Further diluting state US demands, Robert Hannigan, former head of GCHQ, the UK signals intelligence agency, recently wrote in the FT that NCSC had “never found evidence of malicious Chinese state cyber activity through Huawei” and that any “assertions that any Chinese technology in any part of a 5G network represents an unacceptable risk are nonsense”.

The UK's determination is also perplexing in that it stands in contrast to Australia and New Zealand — also Five Eyes members — which last year banned local telecoms providers from using Huawei equipment in 5G networks.

Most importantly, it comes as Donald Trump is said to be considering issuing an executive order that would effectively bar US firms from using Huawei.

Underscoring the US position, US vice-president Mike Pence said on Saturday at the Munich Security Conference that Huawei posed a threat because of a law that requires telecom companies to share data with the Chinese government. At the same forum, Jens Stoltenberg, Nato secretary-general, told the FT that the alliance was taking concerns over Huawei “very seriously” and that several allies wanted a co-ordinated response.

“We have to look into the level of co-ordination we need to respond. We have not yet concluded as an alliance, but it shows the need to address that issue,” he said.

The UK, however, hinted that it would refuse to endorse Washington's "with us or against us line" when Alex Younger, head of MI6, the UK secret intelligence service, on Friday indicated that Britain might take a softer line on Huawei than the US, saying the issue was too complex to simply ban the company. He said it was “a more complicated issue than in or out” and countries had “a sovereign right to work through the answer to all of this”.

Meanwhile, the NCSC is contributing to a government review of UK telecoms infrastructure, due for release in the spring. "The report will probably contain recommendations on how to handle any threats of Chinese espionage posed by Huawei to 5G networks, according to one person briefed on an early draft" the FT reported, adding that the UK will probably recommend a diversity of suppliers and partial restrictions of areas of the 5G network.

“It's not inherently desirable that a piece of significant national critical infrastructure is provided by a monopoly supplier,” Younger said, however he suggested that the UK won't shut out China entirely.

Separately, other European intelligence officials are also concerned about giving Huawei access to 5G networks. But while nations like France and Germany advise caution, they are unlikely to call for an outright ban.

China, naturally, remains furious at the US, which recently submitted an extradition request for Huawei's CFO who was arrested late last year in Vancouver. Eric Xu, one of three rotating Huawei chairmen, this month criticised the US campaign to pressure countries to ban Huawei equipment, and questioned whether the US had ulterior motives. “Some say that because these countries are using Huawei gear, it makes it harder for US agencies to obtain these countries’ data,” he said throwing the espionage ball in Washington's court.