THE UK Government is set to do "what is necessary" in any takeover bid by the US drugs giant Pfizer for the UK's AstraZeneca, Scottish Secretary Alistair Carmichael has suggested, as David Cameron made clear the American company needs to provide more assurances on jobs and investment.

The potential £63 billion deal, which would make it the biggest in UK corporate history, sparked a clash at Westminster with Ed Miliband raising concerns and offering Labour's help to change legislation to widen the public interest test to include pharmaceuticals.

But he warned the Prime Minister that he would be seen as a "cheerleader" for Pfizer if the takeover happened without such proper rigorous assessment.

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Mr Cameron accused the Labour leader of playing politics and insisted the Coalition was getting "stuck in" by engaging with both companies to ensure there were the strongest guarantees about jobs, investment and research and development.

The PM said the commitments made so far - including retaining at least 20% of the research and development workforce in the UK - were "encouraging". "Let me be absolutely clear," he declared, "I'm not satisfied; I want more. But the way to get more is to engage, not to stand up and play party politics."

After the clash at Prime Minister's Questions, Mr Carmichael said: "We are keeping a very close eye on this. If the situation as it emerges requires the Government to take action to intervene, then it may well do what is necessary.

"But this is an emerging picture; that's why the Government has to stay engaged with both sides.

But Harriet Harman, Labour's deputy leader, insisted it was now necessary to broaden the public interest test to include pharmaceuticals, stressing: "It's about taking the power and we've said we would work with the government to take that power."