Folk memories of ancient battles are still a crucial element of Serbian national identity. Photograph: Paolo Pellegrin/Magnum
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The Belgrade train

A journey to the troubled heart of the Balkans.

At Cortanovci in November, the Belgrade train enters the wet woodland of the Danube shore. Egrets stand at ease by poplars. Warblers scatter as the train passes. This Serbian district of hills and orchards is known as the Fruška Gora, or “fruitful hills”. It is also a national park, though there’s nothing at Cortanovci to announce the fact. I’ve glimpsed the crossing-keeper only once in all the years I’ve taken the train: a woman in a stripy headscarf, she sat on a plastic chair in the sunlight among chickens and buckets, knitting.

The express trains no longer stop here, but if you follow the woodland track downhill from the platform you come across traces of an old beauty spot. A stream flows over stones that have been patched together like home-made cobbles. Old man’s beard loops between the trees. Near the water, signs of human activity appear: here a pile of firewood, there a hut made from branches and parts of an old car. Moss has climbed the car-door windows like a stain. On the bank, overgrown concrete plinths suggest the cafés that used to line the shore. Only one remains. Inside its cabin, a portable TV blinks from a high bracket. You can sit on the remains of a terrace and drink a brown sludge of coffee, probably made with river water.

The proprietor smokes at a polite distance. For once, in this talkative country, there’s nothing to say. The river holds his attention and yours. Sleek tenant of some of the most contested land in Europe, the Danube is not Serbian, any more than it is Austrian or Slovak or Romanian. Here it is a working waterway, navigable by immense barges loaded with shipping containers. They glide past, engines chuntering. Deliveries from downriver and even the Black Sea head for the industrial quarter of Novi Sad, inconceivable among the trees of this riverbank but no more than 20 kilometres upstream.

The Macedonian novelist and essayist Aleksandar – Sasha – Prokopiev and I found ourselves drinking coffee in the quiet of Cortanovacka Obala one evening in September 2001. We had escaped from a conference being held by the new, post-nationalist new Serbian Writers’ Association in a former local government holiday villa on the scarp above us. Elsewhere the western world convulsed and panicked. Here the late air was muggy under the trees, bright over the water. Clouds of midges caught the light. After a while, two young guys appeared, carrying an assortment of rods and tools. They had a couple of big fish each: carp, probably, or the bottom-feeding fleshy fish the people in these parts call cpaπ. Before we saw them we heard them, calling their dogs: Ide Goran, ide Zoran. The moment they noticed us they started hustling: beautiful fish, you can eat them here. They were dressed in the odds and ends the poor wear everywhere. One had an old shirt and trousers coloured with oil, the other was in a T-shirt and Chelsea strip tracksuit bottoms. They stared at us cheerfully, even as we declined in a fluster of excuses. Finally, Zivot, good health, they shouted like a kind of shrug, parting, and Zivoti, Sasha answered, bouncing a little in his seat and raising his cup.

I found myself wondering what they had done in the Yugoslav wars of the 1990s: they must have been in their twenties already by the time the conflict ended, and it’s the poor and uneducated everywhere who are first recruited to fight. Often, here, I’m grateful for the way people keep what they’ve seen unspoken; yet those secrets are frightening just because they exist. This is true even of the people I’m closest to. I couldn’t, for instance, mention my unease to Sasha. That evening his country (its official name, at Greek insistence, is now the Former Yugoslav Republic of Macedonia, or “Fyrom”) was still at war. It was something he couldn’t bear to speak about. As in its north-westerly neighbour Kosovo, a fault line had been reopened between the mainly Orthodox Christian, ethnic Slav population and the indigenous Muslim communities, known as Albanians, largely concentrated then, as today, in the region close to Kosovo and Albania. Even as I thought about this, the evening news on the café TV switched to pictures of his home town: the capital, Skopje, in its river basin ringed by mountains, among them the highlands around Tetovo, scene of one of the last offensives of the war. Sasha smiled and shook his head and looked away.

The fishermen were archetypes, doing what countrymen have done everywhere through the centuries. They could have been taken from the foreground of some 18th-century engraving. The Fruška Gora is a habitable idyll, the kind of landscape that humans have imagined in their search for paradise since before the Torah became the Bible. Eden, after all, was an orchard. But this evening its beauty was a kind of con. The overgrown waterfront made it clear that no one was holidaying in paradise. The tapping and knocking sounds of building in the orchards behind us was a sign not of prosperity, but unemployment. Local people were out of work not only due to the loss of tourist income, but because of Nato’s bombing of local industrial plants and the disappearance of a pan-Yugoslav market for Novi Sad’s manufactured goods. Men were fixing up their houses because there was nothing else to do – and because there were refugees to be accommodated.

For Serbs, the war had ended only two years earlier; their dictator Slobodan Milosevic had been gone for less than a year. The beautiful river we sat by, the water table that feeds the Fruška Gora’s orchards, had been polluted by the depleted uranium Nato used in its bombs. The fishermen’s catch, the fruit, even the water in our coffee could have been conta minated. Who knows? Perhaps it was here and now, on this peaceful evening by the Danube, that Sasha ingested, and I did not, the trace of contamination that would lodge in his thyroid and flower as tumours around his face and neck in the decade to come.

“It has been estimated that one-millionth of a gram accumulation in a person’s body would be fatal. There are no known methods of treatment for such a casualty” – this according to a memo written on 30 October 1943 by physicists working on the US nuclear project. Since Nato’s bombing campaign, leukaemia rates among newborn babies in the former Yugoslavia are said to have risen from one per 1,000 to between ten and 15 per 1,000. Recently Sasha told me, once again evading my eyes, about an epidemic of men with prostate and thyroid cancers in Skopje. Even his friend Mickey the mafioso, with whom we danced and drank at Sveti Naum one August Sunday, has gone into the clinic Sasha knows too well, and never come out.

Now the railway line breaks out of the woods and on to the rolling plain of the Banat, the breadbasket of the Balkans. The last of the Fruška Gora is a bald arable ridge sinking into the great level that most characterises Vojvodina, this ethnically mixed northern region of Serbia. It makes a fine contour, subtle and sensuous like the landscapes painted between the world wars by Sava Šumanovic, a Serb artist from nearby Šid, murdered in 1942. I keep a postcard of Šumanovic’s Autumn Viewon my desk, and its cream and gold remind me of the time we visited the little Austro-Hungarian border town, really more of a village. It was in Šid’s Art Klub, over another coffee, that Nenad Velickovic – novelist, youth worker and an ethnic Serb who remained to endure the siege of Sarajevo from 1992 to 1996 – lectured me on the presumption of the foreign NGOs that had flooded into his home town: the outsider never truly understands.

The first time I travelled across the Banat, just after the fall of Milosevic in October 2000, the whiteness stretching on all sides dazzled me. This was my first encounter with the openness of the south-east European plain. It’s Pannonia, the site of a huge lost inland sea, Raša, a translator for the UN peacekeeping forces, told me, lifting a hand from the steering wheel to gesture. Pannonia, he explained, stretches from Vienna to Belgrade and from Zagreb to the north-western corner of Romania, and though centred on the Hungarian steppes it encompasses Vojvodina, central Croatia, western Transylvania and corners of several other countries where they fall between the mountain ranges of the Alps, the Carpathians, the Adriatic Dinarides and the Balkan Mountains in the east.

Raša’s wool collar was stylishly turned up; an expensive scarf covered his chin. Yet despite his smart white four-wheel drive with its UNHCR number plates he was a typical Yugoslav mixture, with a Serb surname, a Muslim first name and, as I was discovering, a very Balkan fatalism. We were speeding north from Skopje to Novi Sad along the most inappropriate motorway I have ever travelled. Single-track in each direction, it had a single, shared central overtaking lane: the worst kind of temptation for drivers of a nation renowned for machismo, and which had recently lost a war. Everyone played chicken. Cars raced towards us, and we towards them, until disaster seemed inevitable – averted only by some sudden swerve.

Apparently unconcerned, Raša continued to explain the identity of this central Balkan region. If Vojvodina is a breadbasket, its handles are gripped by Hungary in the north, Romania in the east, the Serbian capital to the south – and Croatia to the west. That northwestern border between Serbia and Croatia around Vukovar suffered the worst of the conflict between those countries in 1991; yet Vojvodina, and the fertile plain of the Banat in particular, is historically anti-nationalist, a region proud of its ethnic diversity.

In 2002, there were still a quarter of a million Hungarians here and at least three million people from other minority groups: Slovaks, Croats, Montenegrins, Romanians and Roma, but also Bunjevci, Germans, Slovenes and Muslims. The regional capital, the liberal university town of Novi Sad, was known for its desire to distance itself from Milosevic; but later in the war the bombing of its bridges and factories hardened local anti-western feeling.

At the southern tip of the Banat, beyond Nova Pazova, the proximity of the capital announces itself with a strip development of new villas, built in red clay breeze blocks. But who would settle here, in one of these tall new houses, their small grassed yards unfit for the village fruit, flowers and chickens? Without shops, without the comfort of longterm neighbours, this is no village, but an echo of city life in the middle of nowhere.

In its own way it represents a more radical social reconfiguration than the tower blocks of the communist era; and it has become home to those who live nowhere. The builders and owners of these houses are the uprooted, the transplanted: the diasporans who come back each summer and dream of returning for good. A man leans his belly on a balcony rail to watch us pass. Between him and the railway line is dusty common land, full of weeds and criss-crossed with tracks. A goat pulls on a long tether. A ditch is clogged with rusting cars, fridges and bin bags of detritus.

The every-man-for-himself straggle of Nova Pazova is nothing like the planned, communist-era new town of Novi Beograd, where the train soon pulls up at a concrete platform of unmistakably 1970s design. New Belgrade’s bug-eyed concrete tower blocks are the symbols of this dormitory district, built across the river from the old capital. It’s densely populated, and a stop here takes time and is full of noise and emotion. The dreamlike sensation of a long journey is over. Families are reunited. The unfeasible baggage of returnees – huge suitcases, crates and sacks – is unloaded, a cue for shouts and laughter. Meanwhile a couple of youths with gelled hair and sharp jackets, up for a night in town, slip into the seats behind you. No one’s going to check their tickets now.

Finally the train begins to move. The platform slides away. You look down on to the Roma settlement that occupies the wasteland beneath the viaduct. This isn’t a couple of caravans and a van parked up in the English style. Instead, streets of shacks have been put together from the materials that shackbuilders everywhere have to hand: plywood, corrugated iron, cardboard, branches, tarpaulin and rags. To the western eye it looks like apartheid. Shouldn’t Roma people live clean, comfortable lives as they keep their culture and freedom of movement? But no state is going to look after them as well as it does its taxpaying voters. The shanty town signals impasse: the failure of utilitarian solutions to address minority needs.

There have been Roma in Serbia since at least the 14th century. They were here before the Turks, who named and rebuilt the great fortress that dominates the Belgrade city scarp. Kalemegdan stands above the confluence of the Danube and the Sava, the river the train must cross to arrive in the capital. Wide brick walls, fortified with turrets, loop around the edge of a rock and face most impressively east and north, towards us. Like the fortress at Petrovaradin, upstream in Novi Sad, Kalemegdan secured the river routes that helped the administration and prosperity of the Habsburg empire. Now its castle walls enclose lawns, trees and kiosks where you can buy cola and pumpkin seeds and sometimes, for your girl or a child, a keyring with a fluffy toy attached. Old men play chess on park benches, ringed by bystanders. And lovers, of whom Belgrade always has plenty, occupy the seats in the shadiest corners, or sit together on the broken walls. When the wind carries, you can hear the zoo animals yowling at the eastern end of the park.

At Belgrade, the Danube is enormous, easily incorporating the thickly wooded Great War Island that floats just below the citadel. But it is chiefly the Sava that Belgraders proper live on and with. Wider here at its final point than the Thames is at Westminster Bridge, or the Danube under the Chain Bridge in Budapest, the Sava is a Yugoslav river. Named for Saint Sava, the princely archbishop who founded the Serbian Orthodox Church and drafted the first Serbian constitution in 1219, it starts as a racing, turquoise stream in the Julian Alps of Slovenia. After passing through Ljubljana and then Zagreb, it serves as the border between Croatia and Bosnia for 200 kilometres until it reaches Sremska Mitrovica, the town whose prison was appropriated by the Serbian army during the wars of the 1990s.

In her third-floor apartment on a corner block near the Belgrade mouth of the Sava, Marianne, a literary translator who had married into the life of the city, once gave me a glimpse of the kind of bourgeois good life envisioned by the 1930s architect of her block. Her flat was all oak and glass, a circlet of rooms that opened into each other and, repeatedly, on to views of the street and river. Although the original fittings and the bigblocked parquet floors were looking a little tired, the flat continued to model the good life, its interlocking rooms suggesting the interlocking dialogue of family life.

Further west, though, the riverbank ceases to be residential and becomes utilitarian. Here, a train arriving from the south must shunt through a series of sidings below the city rock. Warehouses turn anonymous gable-ends to the tracks where workers amble. Sleepingcars are parked up seemingly at random; curtains flap at their open windows. Beyond lie the trade fair grounds, then suburbs that quickly turn away from the river, leaving its banks to birds and fishermen.

The Sava is also where the pleasure-barges anchor. Nightclubs, restaurants, brothels – in the years after communism they were powered by mafia money and turbo-folk. The aesthetic is bling and glitz; girls with straining corsets, huge eyelashes, fake tans, and enormous voices. Turbo-folk has great tunes (it is derived from folk material, after all), great emotion and a limited palette of topics: lament, passion, nationalist longing. It makes the folk-rock giants of the British 1970s look like mincing antiquarians. Turbofolk isn’t exactly dumbed down – the emotion it works up can be almost complex, at times genuinely sweet-and-sour – but it is amped up. It’s music for drunken parties, music to make the room sway and young women pump their right arm in the air, first finger extended, as they mark the sweet spots where, deliberately breaking her voice, the singer maxes out the emotion.

Turbo-folk is playing at every wedding party you stumble upon. It’s what binds the room together when everyone is already sodden with sentiment and slivovitz. It is grandiose and unsubtle, and a quarter-century ago you could have enjoyed or ironised the vulgar sentiment and thought no more about it. But in the wars of the 1990s the music became nationalist ammunition. The new aristocracy of the time were the mafia warlords and their turbo-folk molls.

Early 1995 brought the marriage of the most famous couple from that world, the mafia warlord Arkan (real name: Željko Ražnatovic) and the turbo-folk star Ceca. Arkan, who had graduated from organised crime and football hooliganism – he was the leader of Red Star Belgrade’s notorious followers, the Delije – wore a faux-military costume. Five years later he was dead, murdered in the lobby of Belgrade’s InterContinental Hotel. Two years after that, when I stayed in the less glittering Hotel Taš, there was still a “No Firearms” sign over the door of the breakfast room, which served nightly as a casino; but the morning eggs were irreproachable. The wars, and their turbo-folk soundtrack, had a tremendous kitsch momentum, although it’s disgusting to use this term in relation to the horrors inflicted on the civilian populations of former Yugoslavia. Still, both violence and music showed detached, postmodern Europe the potency of the lowest common denominator: what happens when thousands surrender their individual judgement to vulgarised emotion.

Balkan folk songs have form as a repository of warlike memory. Perhaps the bestknown of all is “The Field of Blackbirds”, which turns a story of defeat by the Ottoman imperial forces at Kosovo Polje in 1389 into a call to arms for Serbian nationalism. An oral peasant culture, such as still survives in the Balkan countryside, is a fertile context for the transmission of history and ideas through ballad and song. This is not so different from “When Adam Delved and Eve Span”, which we’ve inherited from our 14th-century Peasants’ Revolt, or the protest ballads sung by the wives of striking miners in the 1980s.

The difference, however, lies in the degree of surrender of better judgement, of individual responsibility, that turbo-folk evokes. “History is now and England,” T S Eliot wrote, though we don’t believe him. Turbofolk singers urge us to believe that history is now and Serbia, Bosnia, Kosovo. They position the listener inside the song, telling him that he is part of the story it narrates. They do this through both the words and the music, which doesn’t settle for being tuneful, or even good to dance to. Perhaps it’s easiest to think of it as something akin to soul music: a mix of the evocative national pull of folk music, the “belonging” repertory of regimental or Northern Irish marching bands and the meaningful tug of gospel. It’s music to make a lump rise in your throat against your better judgement.

Yet Belgrade also has a vibrant countertradition. Radio B92, still broadcasting today, confirmed its anti-nationalist stance during the war years not only through its news and commentary but by broadcasting western pop and rock music. In a way that got lost in the west in the 1970s, such music remains politicised here as the sound of idealism and rebellion. There is also a history of indigenous rock as critique. In the 1980s, Idoli, a Belgrade new-wave band with members from across Yugoslavia, issued songs of sardonic social commentary. In 1980 their “Retko te viðam sa devojkama” (“I rarely see you with girls”) was a pioneering gay statement in mainstream culture.

During the war years, B92 playlists moved from Prince and REM to Tricky and Super Furry Animals. Later, the radio station felt a responsibility to sanitise folk music because of the role turbo-folk had played in the war. It did so in part by issuing Srbija: Sounds Global compilations, featuring indisputably ethnographic artists.

The Belgrade train grinds across the steel railway bridge above pleasureboats still moored on either side of the Sava. Squint to the right along the northern bank and you can see a bare patch of ground, something like a building site, where the headquarters of Mirjana Markovic’s JUL party, the old communist left, was destroyed by a Nato bomb in 1999. At the time Markovic, who is still involved in Serbian politics today, was married to Slobodan Milosevic. Nato also bombed RTS, the city’s equivalent of Broadcasting House, as well as a large, army-run building out on the Pancevo road, which turned out to be not a military headquarters, but a hospital. For more than a dozen years, the ruins have been left exposed to the weather as a huge, open-air protest.

As the train arrives on the east bank of the Sava, the White City is grey with dust and petrol fumes, and dusk is settling over the scarp. Soon, it will be too dark to see the remarkable Jugendstil buildings downtown, the Austro-Hungarian villas of the embassy district, or of Knez Mihailova. On that wide pedestrian boulevard the Roma kids will be packing away their fiddles and money caps; suited men will be filling the tables of Snežana: Srpski restoran; and where the American Cultural Centre used to be before it was torched, girls in skintight jeans with tousled hair will scream with laughter down the cement arcade.

At the southern end of Knez Mihailova, where it meets the roaring traffic of the arterial Terazije, stands Hotel Moskva, the best in the city, its newly renovated green tiled roof and gilded art nouveau wall panels gleaming. The Moscow’s marble tearoom becomes a piano bar in the evenings, but the menu never changes. If you don’t want to drink you can still have a thimbleful of thick coffee and a not-quite-fully-thawed cream cake.

Below the hotel the city tips downwards, back to the Sava. Facing it is the Hotel Balkan, where in 1996 the Hungarian writer Péter Zilahy, then a young rebel taking part in the failed anti-Milosevic uprising, photographed government troops waiting under the hotel sign, symbol of the collapse of regional hospitality. Below the Balkan and the Moskva, Balkanska – Balkan Street – winds down to the railway station. You can probably see me there, toiling uphill.

Here’s the stop for the night bus to Skopje. Here’s the small leather-goods shop where I bought a most useful belt. The baklava shop. “Zlater” on the jewellers’ fascia board. The internet café. And ahead of me, huddled on its eccentric corner site, is the Hotel Prag, our usual place.  

Fiona Sampson is a poet. Her latest collection is “Coleshill” (Chatto & Windus, £10)

This article first appeared in the 27 May 2013 issue of the New Statesman, You were the future once

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.

***

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.

***

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