It's the "literature of farewell", Jack tells us. Britain has changed. The old certainties, those that led us to believe that, come Disney or Coca-Cola, Britain's core values, its "Orwellian decency", would stay the same, have vanished.

What happened? Well, we - that free-falling pronoun that means less and less in a multi-everything world - we lost an empire. And then: nothing. No role came falling into our laps; just a series of wistful imaginings: Britain leading the Commonwealth, Britain playing Greece to America's Rome, Britain goading the European Union into shape.

For the Granta gang, what's left is a shell, the power trappings of a played out, corrupt establishment, under which lies a vast emptiness. British hearts now fill with skepticism, rather than self-belief.

Now, it's true that the major thread running through British culture in the nineties has been a sense of loss. But a loss of what? Once, nostalgia meant a yearning for the events, the personalities that made up our past. These days, it seems to be a yearning for belief, for the authenticity and order of yesterday.

Rachel Whiteread's House; Damien Hirst's lost lamb in formaldehyde; the Oasis boys' retread of the Beatles: our artists gingerly touch the past's lipstick traces. Like nails stumbling across the tracks in an old record, they play back a faint, tinny music.

And so what? As myths implode, others are sure to form.

But that's what Grant 56 argues isn't happening. We have, says Jack, simply no idea how things will work out.

Perhaps the best piece here is John Banville's take on Anthony Blunt, the art historian, Keeper of the Queen's Pictures, pillar of the Establishment, and Soviet spy. Caching every nuance of the man and his class, Banville, the literary editor of the Irish Times, depicts Blunt as an unhappy cross between Graham Greene and Quentin Crisp, a lonely outsider caught between worlds.

In a dry interior monologue, Blunt explains how he was betrayed by his friends in high places, as he once betrayed his country. Finally, he found himself without a world - except the one he recreated, or perhaps invented, in his mind.

More tangible loss can be seen by spinning a globe of the world. In Hong Kong, Simon Winchester, a former Guardian foreign correspondent, watches the British prepare to lower the Union Jack and leave their last major colonial possession. The weathered bronze crown has been removed from the wall of the General Post Office; the Queen's head has come off the coins, to be replaced by a bauhinia flower.

The Brits who are left have "an almost shamed aspect". They seem to Winchester to be like "bewildered members of some shabby nobility waiting to leave the country house to which their former staff have taken title".

Some statistics: 50 years ago, the British Empire's overseas colonies contained 800 million people. At the end of June, after Hong Kong reverts to China, the "Empire" will number 168, 000 people scattered across the 12 remaining colonies: the 45 on Pitcairn, the 300 on Tristan da Cunha, those on Gibraltar, Bermuda, the Falklands, and the others, "half-forgotten".

And what of dear old Blighty? Hanif Kureishi's short story, In a Blue Time, shoves us into a Britain at the fag-end of the century, in the morning after the eighties, that last-chance party at the end of the world, where "greatness, comparison, value, depth" have "gone, gone, gone".

A west London media type - we're on familiar Kureishi territory here - worries about compromise and regret after an encounter with an old college friend. But Roy, a true Thatcher's orphan, with nannies, private schools, holidays, dinner parties, clothes, won't go on a walk on the wild side, won't sample the "other". He's too knowing, too post-everything, for that.

Behind Roy's world-view may lie the Rolling Stones and "the delinquent dream of his adolescence - the idea that vigour and spirit existed in excess, authenticity and the romantic unleashed self". But Roy is only playing the role; Jimmy, an old Soho-Boho reprobate of the worst, and most charming, kind, lives it for real. In the harsh gleam of nineties Britain, people like Roy, the successes, can more than afford to revel in their complacency.

So, good-bye, decent, eccentric England? It seems like it. When an illusion is exhausted, an era comes to an end. And certainly, the sense of fair play, that quintessential British characteristic, the sense that came out of not only knowing the rules of the game, but setting the rules in the first place, has disappeared.

Perhaps, then, it is a good idea to pause briefly, just before turning the page, and gaze at this period of indecision and doubt, the moment between the end of their empire and the start of something new.

As the English wave good-bye to past glories, a new British history, a literature of greetings, of arrival, is being written by British Asians, by the young, by those who can only look forward. Granta's next issue, out in April, will be about India. It might catch this mood of surprise, of excitement. But even if it doesn't, watch this space, these isles even, for new histories, new peerings into new beginnings; and, of course, new illusions.