The road to fiscal hell is sometimes paved with the best intentions. As Europe’s politicians seek to win electorates round to brutal budget cuts, they would do well to look to the experience of Japan, which shows how counter-productive austerity can be in a post-bubble recession.

When Japan’s bubble economy imploded in the early 1990s, public finances were in surplus and government debt was a mere 20 per cent of gross domestic product. Twenty years on, the government is running a yawning deficit and gross public debt has swollen to a sumo-sized 200 per cent of GDP.

How did it get from there to here? Not by lavish public spending, as is sometimes assumed. Japan’s experiment with Keynesian-style public works programmes ended in 1997. The consensus then was that they had failed to trigger durable economic recovery and that the legacy of tunnels and bridges to nowhere had little social utility.