The Closed Circle by Jonathan Coe

In The Rotters' Club, Jonathan Coe's novel of adolescent angst, middle-aged infidelity, IRA terrorism and trade union activism in 1970s Birmingham ended with two predictions by the notoriously inaccurate soothsayer, Sam Chase. One was that Benjamin Trotter, the quiet one with artistic ambitions, would enjoy lifelong felicity with Cicely, his stunning (and unwitting) muse. The other was that Margaret Thatcher would never be Prime Minister.

When the characters are rediscovered in The Closed Circle, 25 years on, Thatcher's premiership has been and gone and Cicely, of course, has disappeared from Benjamin's life if not from his head. The editorial team of the King William's School magazine are now in their forties: Emily, the fervent Christian, is married to Benjamin; Claire is recovering from a traumatic relationship with a married Italian; Doug's youthful forays into journalism have landed him a top job on a major broadsheet; and the annoying youngest Trotter, Paul, is a New Labour MP.

Benjamin's youthful promise has yet to bear fruit. He's an accountant by profession; the book he has spent 20 years working on remains a tattered collection of type-written sheets. He worries that his "aura of failure, of disappointment" will scare off the lovely young woman who introduces herself to him in a Birmingham café one afternoon - with far-reaching consequences.

It was Coe's close attention to detail - the politics, the bands, the lashings of Blue Nun - that brought the 1970s so engagingly to life in The Rotters' Club, and he's no less alert in describing the dawn of the new millennium. Paul appears on a comedy news quiz opposite "the smart-arsed editor of a satirical magazine", and we know he's being ridiculed by Ian Hislop on Have I got News for You? The Millennium bug, middle lane motorway drivers and reality TV celebrities all make an appearance.

The book has an up-to-the-minute topicality that most writers shy away from, but it allows Coe to hone in savagely on his bêtes noires. The workers' struggles of The Rotters' Club are over, and a scarily Thatcherite Prime Minister in thrall to a neoconservative US President leads the country and the Labour Party. Coe's characters' grown-up selves inhabit a world of private finance initiatives that "would have been unthinkable ... under the Conservative government"; they have affairs with fat-cat executives who are lavishly rewarded for their business failures. The Iraq war is "ill-advised and dangerous", and although Paul Trotter knows this he still votes for it. It's his sister who seems to speak for the writer - and many of his readers - when she worries that: "It's only a matter of time before something worse happens. Something huge..."

In a novel this richly drawn, it's easy to forgive the odd instance of automatic phrasing (the inevitably "crepuscular gloom") and the occasional clunky piece of character development. (See if you're convinced that one character's ruthless lampooning of the Pusey-Hamiltons in The Rotters' Club was really a subtle panegyric.)

It's easy, because Coe has succeeded in accomplishing that rare feat: a pair of novels that combine the addictive quality of the best soap operas with a basic cultural integrity. The "closed circle" of the title is not only the name of a think-tank-within-a-think-tank, set up by Paul and named after an elite club at school. It's also a fitting description of a tangled narrative that begins and ends with a discussion between two adolescents in a revolving restaurant.

Don't read The Closed Circle until you've read The Rotters' Club, but make sure you have both by your bed the next time you take a sickie or a holiday.