British Euroscepticism has topped the news all week, most obviously around Ukip's surge and the in-out EU referendum bill, but it is also on display in the UK media's coverage of the Eurovision song contest. Coverage has, for the past 15-20 years, been overwhelmingly negative – more so than in any other country participating in the annual songfest.

Trash-talking Eurovision, particularly in the ironic-humorous style popularised by Sir Terry Wogan, has become the UK's default mode for its coverage and public response. So much so that many readers of this article might already be starting to turn off from my argument, because Eurovision as silly, dismissable, tasteless – well, just a bit too "European", really – is the only possible interpretation. But please, bear with me, long enough to consider that there might be other possible angles on a television programme watched by more than 100 million people a year. I think Eurovision-bashing reflects a crisis of collective national identity in the UK; it's a way of expressing feelings of unprocessed anger, frustration, and loss about the UK's place in the rapidly changing Europe and in the world more broadly. The great British social theorist Paul Gilroy has written of the UK's post-colonial melancholy, a failure to properly process and accept the end of the country's status as world leader, and I think that's what's at play here.

The UK has been suffering a prolonged national identity crisis since the 1950s, in which resistance to European integration became a crucial unifying factor. Eurovision became a popular institution where this identity crisis and resultant Euroscepticism played out, and Wogan's commentary was its key conduit. From his earliest days as commentator, Wogan positioned the British as bemused participants in a distinctly foreign, European spectacle, one in which the UK nonetheless enjoyed success and status. He constructed an ideal listener who was, like him, male (or masculine-identified), British (or British-identified), and white. Yes, he was often very funny, but his humour came from comments about individual acts and performers: what might also be described as laughing at foreigners.

This relatively benign expression of Euroscepticism started to turn toxic as the contest expanded in the late 1990s and the UK, along other well-established nations, started to fare poorly. Wogan dismissed performance strategies that he could not fit within his understood Eurovision norms, and spun increasingly paranoid tales of political voting conspiracies. No substantive proof exists that Britain's first-ever nul points result in 2003 was because the rest of Europe was punishing the UK for its participation in the Iraq war (and indeed one could look to Jemini's off-tune performance for a more obvious reason), yet the UK media adopted Wogan's "post-Iraq backlash" hypothesis as fact.

Though considerations beyond the musical have shaped the contest and its voting practices from the beginning, Wogan became nostalgic for a pure, prelapsarian Eurovision that never existed. Increasingly, he used martial language to describe the UK's relationship to Eurovision ("we'll be back next year to give them a damn good thrashing!", he said in 2003 after the Jemini debacle). And so the true nature of Wogan's nostalgia became clear: he wasn't longing for an uncorrupted Eurovision, he was actually nostalgic for the UK as a European and global power, aggressively defending its interests on the continent and around the world.

Wogan exited the commentator's chair after the 2008 contest, and Graham Norton has substituted his slightly irreverent camp banter for Wogan's ironic snark. Wogan's real legacy continues in the dull roar of negativity that emanates from the UK media year after year.

But there is another way of looking at the UK's recent relationship to Eurovision, that offers a more optimistic vision of the country's ability to tolerate difference, particularly the internal differences that characterise the post-imperial, multicultural, multinational British state. The UK's Eurovision acts since 1997 have been stylistically varied, and the country has been represented by a notably diverse group of artists. The last time the UK won Eurovision with Katrina and the Waves, an immigrant (the American Katrina Leskinach) led the act. A year later, the black British singer Imaani came second. Since that time no fewer than seven of the UK's entries have been sung by solo artists who are of colour or mixed heritage or by groups featuring artists of varied ethnic background. Musical styles have ranged from R&B to upbeat soul, to pop with rap elements, to urban dance music. Performers' ages have ranged from 19 to 76. This year's entry, Bonnie Tyler, is evidence of both intra-national diversity and age acceptance, being a 61-year-old Welsh woman.

These Eurovision entries offer a portrait of a lively and diverse society attempting to adapt to a cultural showcase whose codes and conventions are rapidly changing. The Eurovision stage is slowly but discernibly becoming a more diverse place. While celebrated as performing one of the most commercially successful Eurovision songs in many years, the Swedish 2012 winner, Loreen, is also notable for her background and her performance choices: her parents are of Moroccan Berber descent, and she danced on stage with a black man. This represents positive progress towards a contest that more accurately reflects the mingling of nationalities, ethnicities, and cultural traditions that is the reality of today's Europe. Were it to shift its perspective away from Eurosceptic nostalgia, the UK might perceive that, in this, it is already leading the way.