Fiscal
Austerity
Definition
Government policy of reducing budget deficits through spending cuts, tax increases, or both, typically during or after a fiscal crisis.
Explanation
Austerity measures are controversial. Proponents argue they restore fiscal credibility and reduce debt; critics argue they deepen recessions by cutting demand when the economy is already weak. Greece, Spain, Portugal, and the UK implemented austerity after the 2008 crisis with mixed results.