"The future becomes the present, the present the past…" If we tend to think of Tennessee Williams' memory play as shot through with sentiment, John Tiffany makes another case in his celebrated production, which lands in the West End after Broadway and Edinburgh runs. It is, he argues, a matter of hindsight and history and, at a time when the fashion is to pull plays out of their period, Tiffany sews The Glass Menagerie tightly into its historical context with illuminating results.

This is the 1930s and no mistake. Twice, Williams' alter-ego, the aspiring writer Tom Wingfield, alludes to the Guernica massacre of Spain's civil war. He sighs the word with a romantic revolutionary zeal – a dreamer in all things. At home in St Louis, meanwhile, it's all "hot swing music and liquor." America is still reeling from the banking collapse that triggered the Great Depression and now, eight years on, a new recession is just kicking in.

Underlining this context at every turn, Tiffany pulls our sympathies in unusual directions. Rather than the old overbearing mother, heaping undue pressure on her kids, Amanda Wingfield becomes an altogether more reasonable figure in Cherry Jones's hands. She has two dreamers for children, and this is not a time for dreamers. She stands over Tom (Michael Esper) and his typewriter like a demanding line manager, and spurs her disabled, shy daughter Laura (Kate O'Flynn) on like a football coach. Jones lets you see the hustler in this woman – the southern belle who's lost her lot in life and the mother filling in for an absentee father. If she prods her kids towards financial security and away from their hearts and hopes, it's not from a lack of imagination or faith, but out of hardened realism against a bleak economic climate.

This, you soon realise, is a world where bright and brilliant young men wind up in menial warehouse jobs; their salaries well short of what it takes to support a family. Brian J Smith makes clear that Jim O'Connor, the former high school star lined up as Laura's gentleman caller, hasn't simply fallen short of his promise. He's graduated into a world without opportunities, gotten stuck and fallen foul of anxiety. You see it every time he dabs the sweat from his brow when no-one's looking his way. Tom, meanwhile, isn't just an undisciplined boozer. He's a writer at a moment when words won't pay the bills and his mother, struggling to sell magazine subscriptions down the phone, knows as much. If the dance halls are full night after night, if young men drink themselves senseless, it's not out of hedonistic excess, but out of despair.

This being a memory play, though, all this arrives through the warm fug of nostalgia. Natasha Katz casts the whole thing in a burnished sepia glow; golden-hued and rose-tinted. Nico Muhly floats tingling piano runs through the action, and Bob Crowley's design lets the Wingfield's small flat float in the night sky, reflected on a pool of water and surrounded by stars. It puts the most remarkable backspin on the play. Tiffany serves up frustration as if fondly remembered. As well he might. Williams wrote The Glass Menagerie in 1944. From that vantage point, the '30s must have seemed like a lost idyll. "Nowadays," says Tom right at the end, "the world is lit by lightning." Know what he means? The future becomes the present, the present the past…and the past, the future.

What's shattering, though, is that dreams – and love – so nearly win out. The emotional heart lands late on, in the dark, and the scene between Laura and Jim – her so hopeful, him leading her on – is, frankly, shattering. It's as if Tiffany lifts Laura up and then drops her to the floor and neither O'Flynn nor Smith pre-empt a thing. They inch towards one another – her almost forgetting the limp that holds her back, him giving in to a flicker of feeling against his better judgement – and they fall into an extraordinary, showstopper kiss. Just for a second, against all the odds, you think everything might work out just as it should. Then the future becomes the present and the present, the past…

The Glass Menagerie runs at Duke of York's until 29 April 2017.

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