For centuries a liberal outlook has been the only conscionable position for any self-respecting, rational person.
But the politics of the last couple of decades has proven that liberalism has reached the end of the road. To be a liberal politician is to be prepared to put up with just about anything. It's basically synonymous with spineless laissez-faire-ism to the extreme, and has no place in politics today.
Being a true liberal means having a spine and sticking up for liberal values, using military force.
Liberalism is too broad a term to be called defunct. Just about all of the major political parties in the UK (Lib, Lab, Con, UKIP, Greens) could all be considered 'liberal' depending on which definition and which policies you look at.
what do you mean laissez faire to the extreme? economically or culturally? liberals today aren't free marketeers
In the UK, yes I think all the main parties have socially liberal foundations. They believe that the state has certain duties it must take care of and don't generally disagree on this.
But if you look at the United States for example, a very right-wing country where both parties are to some extent advocates of the free-market. The Republican party is especially focused on small government, yet rather ironically tends to tie itself with extremely socially conservative ideals to limit certain civil rights, for example gay marriage which is still only legal in a handful of states. The democrats stand for progressive liberalism (what they call modern American liberalism) but are still very pro-corporate.