Few now doubt that the turbulent international situation has exacerbated and economic slowdown already underway across the advanced economies.

The threat of recession has also led some to suggest that the pendulum might be ready to swing back from the monetarist and neoliberal consensus of the late twentieth century to a modernised and internationalist Keynesianism for the twenty-first. John Grieve Smith takes stock of these shifts, arguing that while the US has shown encouraging signs, EU and UK policymakers are still too wedded to the deflationary bias of the past.

Furthermore, the paper argues, the mood for "re-ordering the world" should prompt us to move forward with renewed urgency the project of "a new Bretton Woods" first raised in the aftermath of the Asian financial crisis of 1997. Our increasing global interdependence means that we depend on the stability of other economies no less than they depend on our own continued growth.

John Grieve Smith is a Fellow of Robinson College, Cambridge with wide experience of government and industry. His most recent book is There is a Better Way: A New Economic Agenda, Anthem Press 2001. He is a member of Catalyst's Editorial Board.

January 08, 2002.