Will Hutton believes both the UK and Ireland should start embracing their'Europeaness' and end their love affairs with the United States, writesJohn McManus

The Iraq war will be the high-water mark of the relentless rise of American conservatism and the export of its social and economic values. This might sound like the deluded last words of a die-hard Ba'ath party official but, is in fact, far from wishful thinking.

The prediction belongs to Mr Will Hutton, New Labour's economic poster boy and best-selling author. As such, it bears careful consideration, given the extent to which Hutton's observations on the dangers of American power - as set out in his book The World We're In - have been validated since its publication last May.

The brickbats from the right and centre-right in Britain that greeted the hardback edition of the book have been replaced by rather more considered reviews of the recently published paperback edition.

The main reason for this is the manifestation of the inherent problem with the increasingly unilateralist US approach to world affairs, about which he warned. The second is the failure of the Bush administration to turn around the US economy with its conservative economic policies, the centrepiece of which is tax cuts for the wealthy.

While he is adamant that he is not anti-American, the 50-year-old former editor of the Observer is highly critical of the type of economic and social policies espoused by the US right, namely the Republican Party.

"America is working very well for middle-class and uppermiddle-class Americans who are having a right royal time. But the rest of America has been let down," he argues.

The explicit contract that existed in the US, that the only obstacle to advancement is your own capacity for hard work, has broken down, he says.

As a result, the US is the most unequal society in the industrialised West and, despite its massive wealth, is a poor second to Europe in many ways. He can cite a mountain of statistics to support his premises and most are in the book, which is a polemical analysis of the US economy and social order.

He unfavourably compares it to the competing continental European approach to the market economy, with its greater emphasis on social contract and disdain for unfettered capitalism.

Unashamedly pro-European, Mr Hutton argues that Britain should end its 25-year love affair with the US and its right-wing economic policies. Instead Britain should embrace its "essential Europeaness", he says. Moreover, such a sea change is inevitable.

Mr Hutton believes that, rather than cement the "special relationship" between Britain and the US, the Iraq conflict has greatly weakened it.

"One of the paradoxes about the Iraq war is that, at first sight, it created all these divisions but the unintentional consequence is that there is a movement towards a common European position. Blair does not want to ever again be in the position he was in," he argues.

Mr Hutton also believes the compelling case that exists for Britain to throw its lot in with its European peers also holds for Ireland.

This is despite the dividends that have flowed from both courting US investment and adopting the sort of low tax, low public spending policies advocated by conservative American economists.

"You can't disassociate Ireland's Europeaness from the success story," he says.

The decision to join the euro at a competitive exchange rate was as important as the employment polices that contributed to a low tax base.

This may be the case, but does it constitute proof that Ireland can now afford to thumb its nose at America?

"I think Ireland can be quite self-confident. The fact that a 15-year influx of American capital helped you get to this position doesn't suddenly mean you have become an American economic satellite," he argues.

"You are in a self-reinforcing growth process; there is an infrastructure of enterprise in Ireland. Dublin is an 'ideopolis' with knowledge economy firms and knowledge economy financial intermediaries.

"If you lost your top five American companies it [the economy\] would still fly. And the enterprises that would fly would be the ones that would conform to the European model of enterprise rather than the US one," he asserts.

In Mr Hutton's view it is not really a question of rejecting US values but more about where Ireland chooses to go from here and the type of socio-economic policies that, given the choice, we would like to see implemented.

"I believe it would be an Irish cut of the European model. That is where you have to end up because inescapably, just like Britain, you are European. You can't escape the fact that what people think is just in this country is very similar to what people think is just in the rest of Europe."

The same applies to eastern Europe, which is where the naysayers argue US economic interests are predicted to migrate if Ireland loses favour.

If anything, given their communist past, places such as Poland and the Czech Republic are even more firmly wedded to the European social democratic ideal, with its emphasis on social solidarity and the importance of the public sphere, he believes.

The reality is that Ireland will continue to play the role of good European and favoured child of America until it proves an untenable strategy.

Although there are signs of strain in the context of the Iraq war, this position has not yet been reached and it probably won't be until Europe is in a position to challenge the US in shaping the world order.

And the key to this, in Mr Hutton's eyes, is Britain joining the single currency. Although this looks less likely than ever following reports that the five tests set by Chancellor Gordon Brown for deciding entry have not be passed.

Mr Hutton is not particularly dismayed. "My contacts in the very highest level of the [European Commission\] tell me there are a lot of ways in which Europe is prepared to help," he says.

These would include a reform of the Stability and Growth Pact to conform with Mr Brown's rules and organisation of the European Central Bank along the lines of the Bank of England, he says.

"I have been told at the highest levels that this deal is on the table for the British Government to pick up. That would certainly help in any referendum and the British government has not picked it up."

When and if they do, then things will get interesting.