Money spinner: Martin Amis and his hip coterie of young British novelists were at the heart of the 80s fiction boom

Generalisations about decades are difficult to maintain. Life doesn't neatly split into 10-year units and anything you say about one particular era can easily be made to apply to another. But for all that, the 1980s were an extraordinary time for British fiction, when popularity coincided with achievement in a way rarely, if ever, equalled since. The year 1984 alone saw the publication of Martin Amis's Money, JG Ballard's Empire of the Sun, Julian Barnes's Flaubert's Parrot, Iain Banks's The Wasp Factory, Angela Carter's Nights at the Circus and David Lodge's Small World. (The Booker Prize winner that year was, surprisingly, Anita Brookner's Hotel du Lac.) Looking further afield than the British Isles, the decade also saw the publication of Schindler's Ark, William Gibson's Neuromancer and Umberto Eco's The Name of the Rose. So what alignment of heavenly influences caused this fiction boom?

Giants still walked the earth of course. Iris Murdoch's finest novel, The Sea, the Sea, was behind her, but The Book and the Brotherhood and The Good Apprentice were as compellingly readable as ever; Amis père still commanded respect; and William Golding and Anthony Burgess famously went head-to-head for the 1980 Booker Prize, the latter refusing to leave his room at the Savoy unless he was told he'd definitely won. He could be excused his tantrum when Golding carried the prize; if you can't win the Booker with a novel as stupendous as Earthly Powers, you might as well give up.

The Booker Prize, and book marketing in general, played a key role in the wider perception of contemporary fiction. For the novelist and critic DJ Taylor, the "symbolic moment" was the transition from Golding, 1980's winner with Rites of Passage, to Salman Rushdie, winner in 1981 with Midnight's Children, beating another seminal Eighties bestseller, DM Thomas's The White Hotel. (The chair of judges in 1981 was the era's literary taste-maker, Malcolm Bradbury).

The inaugural Granta Best of Young British Novelists list in 1983 spelt out who was in vogue to a literary public eager to take notes. Martin Amis, Pat Barker, Julian Barnes, William Boyd, Kazuo Ishiguro, Ian McEwan, Salman Rushdie, Graham Swift and Rose Tremain gained instant fame from the Granta nomination. Also on the list were A N Wilson, Adam Mars-Jones, Lisa St Aubin de Teran and Christopher Priest. The latter is less well known now but highly rated by Christopher Fowler, the custodian of our "Forgotten Authors" column: Fowler calls him "the writer's writer"; his novel The Glamour (1984) is "the first in my recall to pinpoint the frightening new blankness of our times".

"What was special about the fiction of the early 1980s at the time was its sharp contrast to the slices of thin, English realism that had been served up in the late 1970s," comments Taylor. "Suddenly, with Money, Midnight's Children, Waterland, and the range of talent on display in the Granta Best of British promotion, the novel seemed eclectic, multicultural, even vaguely experimental in a way that it hadn't for ages."

This was the self-confident, brash era of Margaret Tha-tcher, however much left-leaning north London authors may have hated her. Library budgets still covered new literary hardbacks, and the Net Book Agreement, which protected authors from the pile 'em high, flog 'em hard world of bean counters and the bottom line, was still in force. It was also the time when large advances started to be handed out: "Amis and [Peter] Ackroyd suddenly became major figures," says Taylor. "This wasn't just a literary phenomenon, it was a commercial phenomenon too – it was as if books and their authors were trendy and saleable in a way they hadn't been 10 years before: Goodbye Kingsley Amis and hello the bright, agreeable future."

However, that bright future wouldn't go away; its exemplars simply grew huger and more suffocatingly eminent as the years went by. What did the younger writers growing up in their shadow make of them? The novelist Matt Thorne was less than impressed. "With honourable exceptions (JG Ballard, Fay Weldon, AS Byatt, Ian McEwan), I can't say that the British fiction of the 1980s excited me much as a young reader or writer," he says. "I think the biggest problem with the fiction of the period is that writers were still too nervous about engaging with popular culture. Eighties film, music and fashion is still an essential reference point for most creative people today, but the literature of the time now looks stiff, dated and unambitious." Instead, the young Thorne looked to America for his kicks. "It wasn't until the late 1980s that American writers such as Bret Easton Ellis and Jay McInerney properly engaged with the age and set the template for much of the fiction of the next 20 years."

Let's not forget, this wasn't just the era of UEA graduates or the hip young things in Martin Amis's social circle (on display in the current National Portrait Gallery photography exhibition Martin Amis and Friends). Just as impressive was The Wasp Factory, Iain Banks's grotesquely horrifying debut. Banks has continued to be a major figure, a commercial and critical success. Also still with us today is "punk novelist" Martin Millar, who debuted in 1987 with Milk, Sulphate and Alby Starvation (featuring a hapless minor drug dealer whom the Milk Marketing Board wants to kill).

At a time when American novelists are often seen to be setting the pace, it's poignant to look back at an era when the British novel was in the ascendant. Perhaps the 1980s have special resonance right now because 25 years, the time lapsed since that annus mirabilis of 1984, is the span needed for young turks to become old farts. "I now pine for slices of thin English realism," muses Taylor. "I wonder if Rushdie ever wrote a decent novel after Shame (1983) or Amis after Money, and think that the whole group of British writers who made their names in the early 1980s had a very mixed effect on what came after." Our 10 essential novels, at least, have more than stood the test of time.

Wise words: Ten essential 1980s novels

1. Earthly Powers (1980) Anthony Burgess

Morally engaged, bitterly entertaining panorama of the 20th century, narrated by Kenneth Toomey, an octogenarian gay writer whose best friend becomes Pope

2. Oranges Are Not the Only Fruit (1985) Jeanette Winterson

Semi-autobiographical novel detailing escape bid by teenage lesbian into the world of books, light and life, from a repressive religious upbringing in the North

3. Hawksmoor (1985) Peter Ackroyd

Creepy East End occult thriller mixing delicious 17th-century pastiche with prototype autopsy-porn. Inspired by the then-unknown Iain Sinclair

4. Waterland (1983) Graham Swift

Eels, ale and incest: history, natural history and human drama combine in this fluid meditation on life in the Fens

5. Riddley Walker (1980) Russell Hoban

Written in a glorious invented English dialect, and set in Kent long after a nuclear holocaust, this picaresque novel is profound, funny and horrifying by turns

7. Money (1984) Martin Amis

Hilarious, bleak exposé of 1980s values narrated by the slobby, sensual John Self, a sleazy film director who hurtles between New York and London, menaced by shadowy forces

8. The Wasp Factory (1984) Iain Banks

Teenage child murderer Frank lives with his father on a Scottish island. Revolting rituals, poignant deaths and a fearsome final twist had critics alternately retching and cheering

9. Sour Sweet (1982) Timothy Mo

This crisp, aromatic tale of Chinese immigrants running a takeaway, who fall foul of the Triads, was nominated for the Booker (as were Mo's two subsequent novels)

10. A Case of Knives (1988) Candia McWilliam

McWilliam's precious prose enraptured literary London when this stylish and macabre debut came out. Quiet of late, though a new book, What to Look for in Winter, is due next year