Britain's financial system

Two years have now elapsed since the tech-stock share bubble burst – most notably on the NASDAQ in New York, but engulfing other high-tech markets as well. In Britain, as in other countries, the overall stock market environment has been relatively bearish in the intervening period. The two events are not causally linked, in that the subsequent decline in established and blue-chip markets is not directly attributable to contagion spreading from the high-tech sector. Yet, taken together, these events have served to divert the attention of both the academic and the policy communities from the wider implications of the ‘new economy’. The ‘new economy’ became so associated with the image of an ever more bullish stock market that the mere presence of falling share prices has stalled the debate about what the ‘new economy’ is, what benefits it could bring, and how it could be integrated into existing economic structures. I suggest that the time is now right to revisit that debate and, in so doing, to reclaim the discussion of the ‘new economy’ from the share price bubble with which it has been popularly linked.