God has staged his biggest comeback since the Resurrection. Even as apologists for the Almighty bewailed the prospect of a Christ-free Christmas, things were looking rough for Mammon. From New York to London, consumer confidence plummeted and empty shopping malls offered cut-price gloom. McDonald's, a brand more globalised than God, recorded its first quarterly loss in 47 years.

There were exceptions. In Bethlehem, donkeys got upgraded from religious symbol to consumer must-have. As the local transport most suited to negotiating post-intifada roadblocks and rubble, they have soared in value. A top-of-the-range model will, apparently, set you back £750.

But that free market parable was atypical. The message at the year's end is that God is back. The Pope, the new Archbishop of Canterbury and the Cardinal Archbishop of Westminster united in their denunciation of war in Iraq and of the politicians who seek to prosecute it. Even the Queen, an artful tactician, took faith as the text of her Christmas message.

Butler trials may collapse, allegations of rape and vengeance may haunt the royal palaces, servants may barter emerald dhows for ready cash and the House of Windsor may set its face against modernisation. Her Majesty's tacit explanation for all of this is that a superior agency must take the rap. Her method is simply to place her faith in God.

Though the secular might think this a crafty ruse, the Queen has touched a nerve. A dominant theme of 2002 was squandered trust. Citizens no longer believed politicians or priests. They grew suspicious of doctors and would mistrust bank managers, if such shysters still existed. Scandal depressed trust in the royal family to a new low point. Only 43 per cent of people now think Britain would be worse off without the Windsors.

The given reasons for lost faith vary. Onora O'Neill, who based her Reith Lectures on trust, blames a culture of information and transparency that has fed uncertainty rather than assuaged it. The threat of terrorism means that basic assumptions, such as the certainty of an anthrax-free commute to work, are challenged.

The Government inspires lethargy, or worse. An analysis of 55 billion internet queries reveals that Britons are more interested in David Beckham than Iraq.

That vacuum, spiritual or secular, is the terrain religious leaders have staked out as their new empire. Theirs is not just, or even mainly, a rallying call to the faithful. It is a calculated move to blur the line where theology and politics meet. The state is failing, and the church scents power.

The Pope's thinly veiled hostility to war against Iraq is not unexpected. John Paul II, the only global figure to criticise America's capitalism and hegemony, has long been an ideologue unrivalled by any left-wing agitator. He is also a traditional moralist opposed to any whiff of liberalism. That clash of subversion and suppression is the block to a more political papacy. As Le Monde reported last week, the Holy See's ambition to become a member of the UN is being fiercely opposed by critics disgusted at the Vatican's feeble line on paedophile priests and its opposition to contraceptive advice for the developing world and condoms for African Aids sufferers.

The pontiff may loathe Bush's war, but the two men embraced one another in May this year, as they marked their joint abhorrence of embryo research and cloning. If the Pope is not the natural upholder of the liberal will, then the Archbishop of Canterbury is a different proposition.

Already, Rowan Williams is the darling of the Left. The Sun can't stand him. His views on civil society have enraged the Home Secretary. Chalice-polishers, flower-arrangers and spinsters cycling to Communion may already long for a reprise of George Carey's definition of the Church as 'an elderly lady who mutters away to herself in a corner'.

In his recent Dimbleby Lecture, Dr Williams rehearsed the rise of the 'market state' and argued that religion must guide economics and politics, which have lost their moral way. Tony Blair, for his part, seems to be losing his initial enthusiasm for the new incumbent. Dr Williams will speak out on schools and prisons. He likes The Simpsons. Liberal atheists are falling at his feet. They are wrong.

For all its good work, the Anglican Church is already far too embroiled in the business of the state. It is the official religion of England, an increasingly anomalous arrangement in a society of many faiths, and none. Its bishops, with no democratic legitimacy, clog up the House of Lords. Its better schools are a magnet to the middle classes.

On a minor point, the archbishop's ambition to make business behave better sits oddly with the head of an asset-rich organisation worth £4 billion. Lambeth Palace, the Canterbury residence, is a splendid, part-medieval mansion with the second largest private garden in London after Buckingham Palace. Such perks, however, are unusual in an organisation defined by shambolic management and poorly paid lower ranks. The Church of England is far from being WorldCom. Still, any City analyst might think Dr Williams should set his own house in order before taking his new broom to national economic policy.

But that is secondary to the real concern. Liberals who feel enthusiastic about putting religion at the heart of state should think back to the early ambitions of George Bush and his spiritual mentor, Pastor Marvin Olasky, to delegate welfare to the churches; a scheme too frightening even for the American Right.

Dr Williams may not be suggesting that the Church usurp the functions of state, but his ambition to make God the driving force of public life is almost more preposterous. In matters of policy, the Almighty and his temporal agents already have much to answer for. Bush and Blair, the most overtly pious Western leaders in modern memory, may bomb Iraq to gravel in the name of the Father, the Son and the Holy Ghost.

The Archbishop urges them to desist at the command of the same Trinity. As social Christians vie for his imprimatur, the secularist can only claim confusion. Whose side is God on? Certainly, the voice of humanity and righteousness belongs to church leaders. But religion has no monopoly on good. To long for peace, diplomacy, caution, justice and for an end to the nihilistic belief in the inevitability of war is also a secular wish.

There is, as yet, no proof that Saddam has weapons of mass destruction. Meantime, North Korea brews up its nuclear capacity as publicly as Jamie Oliver cooking risotto. In this mad world, the pulpit replaces Parliament, and men of God make their pitch as spokesmen for the liberal cause.

A week ago, Christian iconography was too marginalised to garnish a Christmas card. As the New Year dawns, church leaders are suddenly the self-ordained brokers of peace, trust and ethical governance. The Archbishop of Canterbury, haloed in manufactured stardom, is the Will Young of organised religion. But don't put all the blame on him. His claim on power stems from the weakness of politicians and his stridency is sanctified by the silence of the Left.