The Business Secretary, who has been a leading international proponent of open markets, said last week that foreign ownership of some UK businesses may in the long term “disadvantage” a country that has for decades welcomed overseas takeovers.

Hopefully, Mandelson’s remarks will lead to a change in the government’s “flog-the-lot” policy and renew interest in a national industrial strategy long abandoned by Labour.

His comments – set against the backdrop of Kraft Foods’ bid for confectioner Cadbury, one of the icons of British industry – suggest increasing scrutiny in the UK of a decades-long policy that foreign ownership is advantageous for domestic companies, introducing new management with fresh ideas.

The City has long advocated an open door policy to foreign ownership. Many brokerages and investment houses, including the Queen’s brokers Cazenove, were gobbled up by French, German and US banks after the Big Bang in the 1980s.

Mandelson, one of Prime Minister Gordon Brown’s top ministers, said the UK is committed to open markets for trade and investment. But at the same time, he said the country needs to be “mindful” of the long-term effects of foreign ownership.

“I am keeping a weather eye on this area, because I have started to become concerned that over a lengthy period of time, certainly not overnight, UK manufacturing could be a loser,” he said. In particular, Mandelson, who has already talked of rebalancing Britain’s economy to help the country’s manufacturing base, worries that over a period of, for example, 20 years, foreign ownership could “disadvantage” the location of UK manufacturing plants.

He did not provide specific examples but recently, the government has asked Neelie Kroes, the European competition commissioner, to scrutinise the sale of General Motors’ European operations to a consortium led by Canadian car-parts maker Magna International. The government is concerned that the €4.5bn in loans and guarantees to Magna from the German state will result in jobs being protected in Germany over the UK plants of Vauxhall, a brand GM bought in 1925.

Lord Mandelson said that as a “general rule”, markets should remain open to foreign takeovers and would not say what he could do to intervene. “I am not going to make government policy on the hoof,” he stated.

However, his questioning of the long-term benefits of some foreign takeovers is significant. As a UK minister and the former trade commissioner at the European Union, he has been one of the world’s leading proponents of the benefits of globalisation and free trade. Part of that, the UK has always argued, is allowing companies to be bought by foreign firms.

Over the years, Britain has allowed some famous manufacturers, from Pilkington Glass and Imperial Chemical Industries to car brands like Rolls-Royce, Land Rover and Bentley, to be taken over by foreign firms. In the UK, almost every sector is open to foreign buyers, and most of the country’s ports, airports – including the three major terminals in Scotland – and utilities like ScottishPower have been bought by foreign interests.

In parts of Europe, governments frequently step in to stop foreign takeovers, and in the United States, foreign companies cannot buy airlines, shipping firms, port facilities, television networks and some security-related companies. Canada, too, has some restrictions on foreign ownership, particularly in the media and hi-tech sectors.

As unemployment has risen to its highest level since 1995, the British public has shown signs of becoming increasingly concerned over foreign involvement in their country’s economy. At the start of this year, French oil company Total was forced to offer concessions to British workers in a move to end strikes protesting the use of foreign labour at a refinery. Most of the big unions such as Unite and the GMB want tight controls on foreign ownership, arguing that overseas companies have failed to protect British jobs and are quick to move factories to low-cost production areas like Eastern Europe and Asia when the opportunity arises.

Elsewhere within the government, Lord Myners, the City minister, also weighed in on the debate over foreign ownership, telling the Guardian newspaper that too many British companies are at risk of falling into foreign hands because their shares are owned by international funds, which are not concerned with preserving the UK’s corporate heritage.

Supporters of the UK government’s refusal to quash foreign takeovers claim it has resulted in billions of pounds of investment pumped into Britain and the rejuvenation of declining businesses, such as the country’s car-making industry. But critics fear that foreign owners will be more likely than locals to shed jobs during downturns, and that under foreign ownership, the top managerial positions, intellectual properties and even research and development will be controlled by headquarters. In Scotland, the takeover of ScottishPower and Scottish & Newcastle Breweries has resulted in the loss of key head office activities.

The timing of Mandelson’s comments on foreign ownership comes during a period of severe economic turmoil. He made them at a time when the banking sector and corporate capitalism in general have fallen into disrepute because of greed and recklessness. He would never have made them a few years ago when New Labour was courting the City and the economy was chugging along in what appeared to be a never-ending boom. The economic slump changed all that.