In February, the Times explained the lessons the U.S. could take away from Japan’s Lost Decade. But now it seems that those morals are better suited for the U.K., which, the Times is now claiming, is staring down the barrel of it’s own Lost Decade:

Britain may be emerging from recession, but that is little solace for those who suggest that the economy here might follow in the steps of Japan’s lost decade in the 1990s unless the twin threats of burgeoning national debt and ruined banks are adequately addressed.

The parallels are easy to see: Like Japan, Britain enjoyed a decade of booming growth, fueled by aggressive bank lending and real estate investments. Haunted by the comparison, policy makers have been extra aggressive in using fiscal and monetary levers to prevent the type of sustained period of stagnation and banking stasis that plagued Japan for so long.

One of the interesting notes in the February article on the Lost Decade is that the fiscal measures Japan enacted throughout the 90s were a mixed bag, at best:

Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.

…

In the end, say economists, it was not public works but an expensive cleanup of the debt-ridden banking system, combined with growing exports to China and the United States, that brought a close to Japan’s Lost Decade.

So before paving over its rural areas, the UK should probably first address its “ruined banks.” Weird that the Bank of Englad should be worrying about these things now, a full year after Gordon Brown’s government interventions saved not only the banks, but also the world.