Damon Albarn's band Blur and their fans felt London belonged to them. Photo: Rex
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Britpop: an insider’s tale of music’s last great gold rush

Twenty years ago, it felt like John Niven and his fellow indie kids had won pop's cold war. But then the madness set in.

It’s such an awful term, isn’t it? A genuinely dreary expression – Britpop. So bovine and literal, containing none of the wit or musicality of “punk rock” or “acid house”. Let’s face it, even “skiffle” – with all its onomatopoeic bounce and shuffle – was a better word to describe a genre than Britpop. Still, we’d best call it something if we’re to remain on the same page.

Exactly twenty years ago this month, in the spring of 1994, I moved from Scotland to London, renting a room from my friend John Kellett in a Georgian maisonette in Notting Hill Gate. John was the head of legal and business affairs at Go! Discs, which was enjoying huge success with Paul Weller and the Beautiful South and was getting ready to release the first Portishead album. I was moving from working at a tiny independent label in Glasgow to my first major job, at London Records, then part of the PolyGram group. Go! Discs was based in Chiswick, west London. We were in nearby Hammersmith. Most mornings that summer, John and I would race each other to work in our company cars, speeding along the Westway.

I wasn’t the only indie kid graduating up from the bush leagues that year. In the weeks and months following my move south, Blur released Parklife and Oasis put out Definitely Maybe: the two records that heralded the Imperial Phase of what would come to be known as Britpop, a movement that had been birthed a year earlier – albeit in a crude, forced, C-section kind of way – by a Select magazine cover featuring the Auteurs, Pulp, Suede, Denim and Saint Etienne. (Note to readers much under 30: Select was a kind of Q or Mojo for rave and indie kids whose existence exactly spanned the Nineties.)

Bliss was it in that dawn to be alive, but to be young, overpaid and living in London was very – well, heaven might be stretching it, but you certainly felt glad you weren’t in the Shetland Isles, or out in Hackensack, New Jersey.

Indie London of the Eighties had been a grim old place, a sad wasteland where you stared through your fringe at the June Brides or the Shop Assistants as they played in a brightly lit room above a pub, the carpet crunching beneath you as you frugged shambolically under the powerful spell of three Hofmeisters. In our world in 1988, to see a band like Primal Scream filling the big hall at Ulu (capacity: 700) was like seeing the Stones at Madison Square Garden in 1975. A few short years later this kind of gig would be a warm-up show . . .

By all means go ahead and cock your snook in the cold light of 2014, but it’s hard to overstate how exciting the early Oasis shows were, or the thrill of hearing Blur’s “For Tomorrow” in a speeding car on the Westway. Of hearing records you loved coming out of radios in offices and factories all over the country, rather than from the stereo in a sordid bedroom containing you and five of your mates. Suddenly the bands you liked were in the charts and you and your friends were working at major labels, and it felt like we had won the indie cold war of the Eighties. Suddenly you were in the VIP box at Maine Road, lurid with drugs and icy champagne. Suddenly watching Death by Milkfloat at the Camden Falcon felt a long, long way away as the capital came alive for us.

The street names I learned for the first time during that hot summer of 1994 are as sweet to me today as a litany: Westbourne Park Road, Ladbroke Grove, Camden Parkway and Old Compton Street. Of course, we were just doing what generation after generation before us had done – finding our feet in London and deciding it belonged to us and no one else. We painted it in our own colours: the gold of dawn, the chalky white of Ecstasy and cocaine and the bold red of New Labour.

We were in from the cold. And very soon we created an environment where Cast could have a double platinum debut album, where Blur and Oasis were discussed on the national news, where Leon from Northern Uproar could talk openly of buying a casino, and yet still aliens did not come and destroy our planet.

As you get older, you realise that every generation has its moment where impotence becomes prepotency. Where it gets its shot in office. The hippies of the Sixties swapped tie-and-dye and four-skin joints for velvet suits and gold coke spoons and ran CBS and Warner Brothers in the Seventies. The punk rockers of the Seventies wore Yohji Yamamoto suits and turned rebellion into money as they presided over the cold stream of synthetic pop music that we indie kids waged war against in the Eighties. And in our turn, in the Nineties, we untucked our Ralph Lauren shirts and talked about “having it” and “larging it” and we thought Audioweb not altogether a bad thing, and we dumbed it down and watched the cash pour in.

It was to be the last great gold rush of the music industry, when having a decent hit meant you were selling over a million albums at 13 quid a pop. As opposed to today, when you’re celebrating doing 100,000 at £7 per unit. We were selling ten times the volume at twice the price. It did not lead to reasonable behaviour or sane decisions. And, again like every generation before us, we eventually came to realise that our moment of dominance was hollow and riven with compromise. Cocaine destroyed you. We went to war in Iraq. Cast broke up. And, as John Harris sagely noted in his superlative study of the period, The Last Party, Leon from Northern Uproar did not get that casino.

As the decade drew to a close it all changed. Noel went into the kitchen at Supernova Heights one morning in 1998 to start the day with a lager and a chunky line of bugle and thought, “What the fuck am I doing?” In four short years we went from “you might as well do the white line” to Jarvis desolately singing “bye-bye” at the end of This Is Hardcore.

Britpop. Look upon its works, ye mighty, and, what? Sigh? Laugh? Shrug? Do not judge us too harshly. Like Francis Ford Coppola making Apocalypse Now – if you can picture Coppola snapping his fingers Manc-style in an untucked Ralph Lauren shirt and crocodile-effect Patrick Cox loafers – we were young, we had too much money and we had access to too much “equipment”.

And, little by little, we went insane.

John Niven is the author of “Kill Your Friends”, “The Amateurs” and “Second Coming” (all published by Vintage)

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

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The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

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In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt