In 2016 Theresa May launched her campaign to become Conservative party leader and Britain’s prime minister with a speech that promised to do “something radical” about corporate takeovers. She warned that “transient shareholders … are not the only people with an interest when firms are sold or close. Workers have a stake, local communities have a stake, and often the whole country has a stake.” Fast forward 18 months and Mrs May, drained of authority, has no proper industrial strategy.

Yet a real test of her words has emerged in the City, where a £7bn hostile battle appears to pit financial engineering against real engineering. Melrose, whose holding company is staffed by about 50 executives skilled in the arts of law and finance, has launched a corporate raid for GKN, a British manufacturing giant employing 56,000 people and a world leader in automotive and aircraft technology. Melrose wants to purchase GKN by borrowing £1.4bn and offering that as a sop to shareholders. If successful, that loan will be added to GKN’s debt, diverting cash away from useful investment and obligations to its 32,000 pensioners. This doesn’t seem to trouble Melrose’s top four bosses. They plan to split up and sell parts of the industrially vital business, no doubt minimising taxes and cutting costs, within five years. If successful, the bosses could share an absurd £285m in bonuses.

On Wednesday Greg Clark, the business secretary, will meet unions to discuss the bid. They worry that an earlier Melrose buyout of an engineering firm threatens hundreds of British jobs. Ministers can intervene where mergers raise public interest concerns, including that of national security – plausible as GKN is a key defence supplier. Labour has urged Mr Clark to act. He should do so to satisfy the law and to signal a return to Mrs May’s vision. The UK is too hospitable to hostile takeovers. It rewards clever readers of the stock market rather than industrial innovation. This is not because big mergers add value or deliver social and economic benefits – rather the reverse. It is because for 30 years the country has been in ideological hock to the City – whose bankers, lawyers and accountants rake in huge fees in takeover battles.

Mrs May should trust her instinct that the shrinking of manufacturing coincided with the emergence of a more divided Britain. She should come up with an industrial strategy which recognises that too much surplus is being redirected from enhancing productivity to speculative activity.

This would see a wider national interest test for takeovers; require a higher threshold than just the majority of shares to buy a company; and restrict short-term investors such as hedge funds from having a vote in mergers. Such measures would allow ministers to extract concrete commitments from corporates for the benefit of wider society. Other nations offer firms a degree of protection from hostile takeovers without damaging investment flows. It’s time that Britain did too.