The world needs leaders with the vision to forge New Deal-type policies to tackle the potentially disastrous combination of climate change, high inflation and economic slowdown, a British think-tank said yesterday. A New Green Deal, a report issued by the New Economics Foundation (NEF), uses the convergence of credit crunch, climate change and booming food and fuel prices to make the case for a new economics for the 21st century.

Key points are that every home must generate its own power, an oil legacy fund must be set up using windfall taxes on oil and gas firms to help pay for green transformation, and carbon should be priced according to its climate impact. Interest rates should be cut to help investment in green energy and transport infrastructure, and monolithic financial institutions should be broken up so the failure of one would not destabilize the economy. ?A credit crisis, coupled with high and rising oil prices and long-term climatic upheaval, are conspiring to create the perfect storm,? said NEF director Andrew Simms.?Instead of desperate baling-out, we need a comprehensive plan and a new course to navigate each obstacle in this new phenomenon.We need a modern Green New Deal that has the scale, boldness and vision previously only seen, for example, in Roosevelt's response to the Great Depression.? This New Deal aimed at helping the poor, reforming the US financial system and stimulating the economy after the Wall Street crash in the 30s

Today, economists say global economic growth is slowing and scientists urge for action to stop the planet entering a period of unstoppable temperature rise.?The credit, climate and oil crunches are all individually serious issues, but combined their impact could be catastrophic for our economy and our way of life,? said Tony Juniper, co-author of the report and former head of Friends of the Earth.?We need real leadership and vision to get through this, and right now we are not seeing it. Politicians from across the spectrum should signal their willingness to think differently and to embrace new ideas.?

The report calls for a low-carbon energy system, financial incentives and policies to promote energy efficiency, closer scrutiny of exotic tax avoidance, a clampdown on tax havens and capital controls. ?We need a comprehensive plan which would involve far tougher regulation of capital, changes to tax systems and a sustained programme of investment in energy conservation and renewable energy,? said Larry Elliott, economics editor of The Guardian and co-author of the report.