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Austerity Definition & Meaning - Merriam-Webster
Austerity Definition & Meaning - Merriam-Webster
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austerity
noun
aus·ter·i·ty
ȯ-ˈster-ə-tē
-ˈste-rə-,
also -ˈstir-ə-
plural austerities
Synonyms of austerity
1
: the quality or state of being austere: such as
a
: a stern and serious quality
the formal austerity of his manner
b
: a plain and simple quality
the austerity of the design
2
: enforced or extreme economy especially on a national scale
lived through years of austerity after the war fiscal austerity a series of austerity measures [=measures taken to reduce spending]
3
a
: an austere act, manner, or attitude
monastic self-denial and austerities
b
: an ascetic (see ascetic sense 1) practice
Examples of austerity in a Sentence
the austerity of the design
The austerity of their lifestyle was surprising.
They lived through years of austerity after the war.
the austerities practiced by monks
Recent Examples on the Web
Once again, Argentina’s policy makers have implemented austerity measures that have reduced or stopped social programs.
—Robert Ginsburg, Forbes, 21 Feb. 2024
Like British director Loach, Morton has often criticized the ruling Conservative Party in the U.K. of hurting people and society with austerity measures.
—Georg Szalai, The Hollywood Reporter, 18 Feb. 2024
After years of wartime austerity and government imposed restrictions on the use of all materials used to make clothing, and the shortages of raw materials to make them, Carolle’s joyful, ultra feminine designs were the equivalent of a glass of cool water on the hottest summer day.
—Rachel Elspeth Gross, Forbes, 16 Feb. 2024
The images from the British leg are exhibited in small ‘‘austerity’’ walnut frames, to indicate Britain was still in throes of a postwar recession.
—Lucie Young, New York Times, 9 Feb. 2024
The austerity of the architecture, designed in the Bauhaus style with sharp lines and bursts of primary colors, provides an exciting juxtaposition to the natural grandeur of the property — the immense slopes of the Rockies and the slender towering reach of the Aspen trees.
—Chadner Navarro, Travel + Leisure, 3 Feb. 2024
California continues to follow the prudent fiscally responsible behavior of U.S. presidents, of both parties, ensuring our children and grandchildren, that remain in the state, will be thanking us for our austerity (sarcasm noted).
—Phillip Molnar, San Diego Union-Tribune, 19 Jan. 2024
The federal government is struggling to reckon with a budget crisis and is ushering in a new age of austerity.
—Ishaan Tharoor, Washington Post, 23 Jan. 2024
The county, which was a financial wreck decades ago, overhauled its finances, went on an austerity program and not only put its budget in order, but built sizable reserves that were the envy of other governments.
—Michael Smolens, San Diego Union-Tribune, 19 Jan. 2024
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These examples are programmatically compiled from various online sources to illustrate current usage of the word 'austerity.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.
Word History
Etymology
see austere
First Known Use
14th century, in the meaning defined at sense 1
Time Traveler
The first known use of austerity was
in the 14th century
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Phrases Containing austerity
austerity measures
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Dictionary Entries Near austerity
austere
austerity
austerity program
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Merriam-Webster
“Austerity.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/austerity. Accessed 12 Mar. 2024.
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Kids Definition
austerity
noun
aus·ter·i·ty
ȯ-ˈster-ət-ē
plural austerities
1
: the quality or state of being austere
2
: an austere act, manner, or attitude
3
: a way of living with few or no luxuries
More from Merriam-Webster on austerity
Thesaurus: All synonyms and antonyms for austerity
Nglish: Translation of austerity for Spanish Speakers
Britannica English: Translation of austerity for Arabic Speakers
Last Updated:
5 Mar 2024
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AUSTERITY | English meaning - Cambridge Dictionary
AUSTERITY | English meaning - Cambridge Dictionary
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English (UK)
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English
Meaning of austerity in English
austeritynoun uk
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/ɔːˈster.ə.ti/ us
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/ˈɑː.ster.ə.t̬i/
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[ C or U ] the condition of living without unnecessary things and without comfort, with limited money or goods, or a practice, habit, or experience that is typical of this: The wartime austerity of my early years prepared me for later hardships. The austerities of life in a small rural community were not what I was used to.
[ U ] a difficult economic situation caused by a government reducing the amount of money it spends: People protested in the streets against austerity. The government today announced new austerity measures.
[ U ] the quality of being austere in appearance or manner: the austerity of her short hair and plain grey suit
SMART Vocabulary: related words and phrases
Plain and ordinary
as it comes idiom
austere
austerely
average Joe
be a dime a dozen idiom
homespun
homey
humble
humdrum
middle-of-the-road
sparely
spartan
stale
starkly
starkness
unornamented
unostentatious
unostentatiously
unpainted
unremarkable
See more results »
(Definition of austerity from the Cambridge Advanced Learner's Dictionary & Thesaurus © Cambridge University Press)
austerity | American Dictionary
austeritynoun [ U ] us
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/ɔˈster·ɪ·t̬i, -ˈstɪər-/
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Austerity is also a bad economic condition that does not allow luxuries: Military spending continues even in periods of austerity.
(Definition of austerity from the Cambridge Academic Content Dictionary © Cambridge University Press)
austerity | Business English
austeritynoun [ U ] uk
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/ɒsˈterəti/ us
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ECONOMICS, GOVERNMENT a situation in which a government spends as little money as possible because of bad economic conditions: The idea was to stabilise the economy through strict austerity. The government introduced a number of austerity measures to help cut the deficit.
(Definition of austerity from the Cambridge Business English Dictionary © Cambridge University Press)
Examples of austerity
austerity
One notices a tendency to expect from these parents austerities and a willingness to make sacrifices of a very severe character.
From the Hansard archive
Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0
There must surely be some limit to the enjoyment of such austerities.
From the Hansard archive
Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3.0
Such austerities are undertaken according to the physical and mental limits of the individual ascetic.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
Only the practice of austerities and self-control can modify or alleviate the consequences of karma.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
Whatever time could be spared from his active duties was given up to contemplation, to fastings, watchings, disciplines, and other austerities.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
He immersed himself in spiritual pursuits like meditation and austerities and his health broke down.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
He had recently retired from teaching and wanted to put behind him the more rigid austerities of university life.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
Finally, that happened after thirty years of austerities and intense searching.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
Jainism has often been described as an ascetic movement for its strong emphasis on self-control, austerities and renunciation.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
Issues of economic austerity and handling international pressure were both centralizing.
From the Cambridge English Corpus
The period began with wages depressed by the world crisis of 1930s and the austerity of the war.
From the Cambridge English Corpus
She was very pious, and always practiced austerities and devotion.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
Since then healthcare expenditure has declined slightly as a result of austerity measures.
From the Cambridge English Corpus
They had fiercely opposed the austerity policy and tried to depict it as unfair and a clamp-down against the weakest in society.
From the Cambridge English Corpus
On account of happiness and pleasures, the religion, renunciation and austerities was not possible.
From Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.
See all examples of austerity
These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors.
What is the pronunciation of austerity?
C1
Translations of austerity
in Chinese (Traditional)
簡樸（的生活）, 艱苦（的生活）, （國家開支上的）緊縮，縮減…
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in Chinese (Simplified)
简朴（的生活）, 艰苦（的生活）, （国家开支上的）紧缩，缩减…
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in Spanish
austeridad, severidad…
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in Portuguese
austeridade, severidade…
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in more languages
in French
in Turkish
in Dutch
in Czech
in Danish
in Indonesian
in Thai
in Vietnamese
in Polish
in Swedish
in Malay
in German
in Norwegian
in Ukrainian
in Italian
austérité…
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sadelik, yalınlık…
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soberheid…
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prostota…
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enkelhed, beskedenhed…
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kesederhanaan…
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ความเคร่งครัด, ความมัธยัสถ์…
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sự mộc mạc…
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surowe warunki, surowość…
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stränghet, stramhet…
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kesederhanaan…
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die Strenge…
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barskhet, strenghet…
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суворість, аскетизм…
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austerità, severità…
See more
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Austerity - Wikipedia
Austerity - Wikipedia
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(Top)
1History
2Justifications
3Theoretical considerations
Toggle Theoretical considerations subsection
3.1Multiplier effects
3.2Crowding in or out
3.3Government budget balance as a sectoral component
4Framing of the debate surrounding austerity
5Empirical considerations
Toggle Empirical considerations subsection
5.1Europe
5.1.1Eurozone
5.1.1.1Greece
5.1.1.2France
5.1.1.3Latvia
5.1.2United Kingdom
5.1.2.1Post war austerity
5.1.2.221st century austerity programme
5.2United States
6Controversy
7Balancing stimulus and austerity
8"Age of austerity"
9Word of the year
10Examples of austerity
11Criticism
Toggle Criticism subsection
11.1DeLong–Summers condition
11.2Impacts on short-run budget deficit
11.3No credit risk
12Alternatives to austerity
13See also
14References
15Further reading
16External links
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Austerity
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From Wikipedia, the free encyclopedia
Economic policies intended to reduce government budget deficits
For other uses, see Austerity (disambiguation).
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Part of the Politics series onNeoliberalism
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In economic policy, austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both.[1][2][3] There are three primary types of austerity measures: higher taxes to fund spending, raising taxes while cutting spending, and lower taxes and lower government spending.[4] Austerity measures are often used by governments that find it difficult to borrow or meet their existing obligations to pay back loans. The measures are meant to reduce the budget deficit by bringing government revenues closer to expenditures. Proponents of these measures state that this reduces the amount of borrowing required and may also demonstrate a government's fiscal discipline to creditors and credit rating agencies and make borrowing easier and cheaper as a result.
In most macroeconomic models, austerity policies which reduce government spending lead to increased unemployment in the short term.[5][6] These reductions in employment usually occur directly in the public sector and indirectly in the private sector. Where austerity policies are enacted using tax increases, these can reduce consumption by cutting household disposable income. Reduced government spending can reduce gross domestic product (GDP) growth in the short term as government expenditure is itself a component of GDP. In the longer term, reduced government spending can reduce GDP growth if, for example, cuts to education spending leave a country's workforce less able to do high-skilled jobs or if cuts to infrastructure investment impose greater costs on business than they saved through lower taxes. In both cases, if reduced government spending leads to reduced GDP growth, austerity may lead to a higher debt-to-GDP ratio than the alternative of the government running a higher budget deficit. In the aftermath of the Great Recession, austerity measures in many European countries were followed by rising unemployment and slower GDP growth. The result was increased debt-to-GDP ratios despite reductions in budget deficits.[7]
Theoretically in some cases, particularly when the output gap is low, austerity can have the opposite effect and stimulate economic growth. For example, when an economy is operating at or near capacity, higher short-term deficit spending (stimulus) can cause interest rates to rise, resulting in a reduction in private investment, which in turn reduces economic growth. Where there is excess capacity, the stimulus can result in an increase in employment and output.[8][9] Alberto Alesina, Carlo Favero, and Francesco Giavazzi argue that austerity can be expansionary in situations where government reduction in spending is offset by greater increases in aggregate demand (private consumption, private investment, and exports).[10]
History[edit]
The origin of modern austerity measures is mostly undocumented among academics.[11] During the United States occupation of Haiti that began in 1915, the United States utilized austerity policies where American corporations received a low tax rate while Haitians saw their taxes increase, with a forced labor system creating a "corporate paradise" in occupied Haiti.[12] Another historical example of contemporary austerity is Fascist Italy during a liberal period of the economy from 1922 to 1925.[11] The fascist government utilized austerity policies to prevent the democratization of Italy following World War I, with Luigi Einaudi, Maffeo Pantaleoni, Umberto Ricci and Alberto de' Stefani leading this movement.[11] Austerity measures used by the Weimar Republic of Germany were unpopular and contributed towards the increased support for the Nazi Party in the 1930s.[13]
Justifications[edit]
Austerity measures are typically pursued if there is a threat that a government cannot honour its debt obligations. This may occur when a government has borrowed in currencies that it has no right to issue, for example a South American country that borrows in US Dollars. It may also occur if a country uses the currency of an independent central bank that is legally restricted from buying government debt, for example in the Eurozone.
In such a situation, banks and investors may lose confidence in a government's ability or willingness to pay, and either refuse to roll over existing debts, or demand extremely high interest rates. International financial institutions such as the International Monetary Fund (IMF) may demand austerity measures as part of Structural Adjustment Programmes when acting as lender of last resort.
Austerity policies may also appeal to the wealthier class of creditors, who prefer low inflation and the higher probability of payback on their government securities by less profligate governments.[14] More recently austerity has been pursued after governments became highly indebted by assuming private debts following banking crises. (This occurred after Ireland assumed the debts of its private banking sector during the European debt crisis. This rescue of the private sector resulted in calls to cut back the profligacy of the public sector.)[15]
According to Mark Blyth, the concept of austerity emerged in the 20th century, when large states acquired sizable budgets. However, Blyth argues that the theories and sensibilities about the role of the state and capitalist markets that underline austerity emerged from the 17th century onwards. Austerity is grounded in liberal economics' view of the state and sovereign debt as deeply problematic. Blyth traces the discourse of austerity back to John Locke's theory of private property and derivative theory of the state, David Hume's ideas about money and the virtue of merchants, and Adam Smith's theories on economic growth and taxes. On the basis of classic liberal ideas, austerity emerged as a doctrine of neoliberalism in the 20th century.[16]
Economist David M. Kotz suggests that the implementation of austerity measures following the 2007–2008 financial crisis was an attempt to preserve the neoliberal capitalist model.[17]
Theoretical considerations[edit]
Main article: Keynesian economics
Red: corporate profits after tax and inventory valuation adjustment. Blue: nonresidential fixed investment, both as fractions of U.S. GDP, 1989–2012.
In the 1930s during the Great Depression, anti-austerity arguments gained more prominence. John Maynard Keynes became a well known anti-austerity economist,[16] arguing that "The boom, not the slump, is the right time for austerity at the Treasury."
Contemporary Keynesian economists argue that budget deficits are appropriate when an economy is in recession, to reduce unemployment and help spur GDP growth.[18] According to Paul Krugman, since a government is not like a household, reductions in government spending during economic downturns worsen the crisis.[19]
Across an economy, one person's spending is another person's income. In other words, if everyone is trying to reduce their spending, the economy can be trapped in what economists call the paradox of thrift, worsening the recession as GDP falls. In the past this has been offset by encouraging consumerism to rely on debt, but after the 2008 crisis, this is looking like a less and less viable option for sustainable economics.
Krugman argues that, if the private sector is unable or unwilling to consume at a level that increases GDP and employment sufficiently, then the government should be spending more in order to offset the decline in private spending.[19] Keynesian theory is proposed as being responsible for post-war boom years, before the 1970s, and when public sector investment was at its highest across Europe, partially encouraged by the Marshall Plan.
An important component of economic output is business investment, but there is no reason to expect it to stabilize at full utilization of the economy's resources.[20] High business profits do not necessarily lead to increased economic growth. (When businesses and banks have a disincentive to spend accumulated capital, such as cash repatriation taxes from profits in overseas tax havens and interest on excess reserves paid to banks, increased profits can lead to decreasing growth.)[21][22]
Economists Kenneth Rogoff and Carmen Reinhart wrote in April 2013, "Austerity seldom works without structural reforms – for example, changes in taxes, regulations and labor market policies – and if poorly designed, can disproportionately hit the poor and middle class. Our consistent advice has been to avoid withdrawing fiscal stimulus too quickly, a position identical to that of most mainstream economists."
To help improve the U.S. economy, they (Rogoff and Reinhart) advocated reductions in mortgage principal for 'underwater homes'—those whose negative equity (where the value of the asset is less than the mortgage principal) can lead to a stagnant housing market with no realistic opportunity to reduce private debts.[23]
Multiplier effects[edit]
In October 2012, the IMF announced that its forecasts for countries that implemented austerity programs have been consistently overoptimistic, suggesting that tax hikes and spending cuts have been doing more damage than expected and that countries that implemented fiscal stimulus, such as Germany and Austria, did better than expected.[24]
The IMF reported that this was due to fiscal multipliers that were considerably larger than expected: for example, the IMF estimated that fiscal multipliers based on data from 28 countries ranged between 0.9 and 1.7. In other words, a 1% GDP fiscal consolidation (i.e., austerity) would reduce GDP between 0.9% and 1.7%, thus inflicting far more economic damage than the 0.5 previously estimated in IMF forecasts.[25]
In many countries, little is known about the size of multipliers, as data availability limits the scope for empirical research.
For these countries, Nicoletta Batini, Luc Eyraud and Anke Weber propose a simple method—dubbed the "bucket approach"—to come up with reasonable multiplier estimates. The approach bunches countries into groups (or "buckets") with similar multiplier values, based on their characteristics, and taking into account the effect of (some) temporary factors such as the state of the business cycle.
Different tax and spending choices of equal magnitude have different economic effects:[26][27][28]
For example, the U.S. Congressional Budget Office estimated that the payroll tax (levied on all wage earners) has a higher multiplier (impact on GDP) than does the income tax (which is levied primarily on wealthier workers).[29] In other words, raising the payroll tax by $1 as part of an austerity strategy would slow the economy more than would raising the income tax by $1, resulting in less net deficit reduction.
In theory, it would stimulate the economy and reduce the deficit if the payroll tax were lowered and the income tax raised in equal amounts.[30]
Crowding in or out[edit]
Further information: Crowding out (economics)
The term "crowding out" refers to the extent to which an increase in the budget deficit offsets spending in the private sector. Economist Laura Tyson wrote in June 2012, "By itself an increase in the deficit, either in the form of an increase in government spending or a reduction in taxes, causes an increase in demand". How this affects output, employment, and growth depends on what happens to interest rates:
When the economy is operating near capacity, government borrowing to finance an increase in the deficit causes interest rates to rise and higher interest rates reduce or "crowd out" private investment, reducing growth. This theory explains why large and sustained government deficits take a toll on growth: they reduce capital formation. But this argument rests on how government deficits affect interest rates, and the relationship between government deficits and interest rates varies.
When there is considerable excess capacity, an increase in government borrowing to finance an increase in the deficit does not lead to higher interest rates and does not crowd out private investment. Instead, the higher demand resulting from the increase in the deficit bolsters employment and output directly. The resultant increase in income and economic activity in turn encourages, or "crowds in", additional private spending.
Some argue that the "crowding-in" model is an appropriate solution for current economic conditions.[9]
Government budget balance as a sectoral component[edit]
Main article: Sectoral balances
Sectoral balances in U.S. economy 1990–2012. By definition, the three balances must net to zero. Since 2009, the U.S. capital surplus and private-sector surplus have driven a government budget deficit.According to economist Martin Wolf, the U.S. and many Eurozone countries experienced rapid increases in their budget deficits in the wake of the 2008 crisis as a result of significant private-sector retrenchment and ongoing capital account surpluses.
Policy choices had little to do with these deficit increases. This makes austerity measures counterproductive. Wolf explained that government fiscal balance is one of three major financial sectoral balances in a country's economy, along with the foreign financial sector (capital account) and the private financial sector.
By definition, the sum of the surpluses or deficits across these three sectors must be zero. In the U.S. and many Eurozone countries other than Germany, a foreign financial surplus exists because capital is imported (net) to fund the trade deficit. Further, there is a private-sector financial surplus because household savings exceed business investment.
By definition, a government budget deficit must exist so all three net to zero: for example, the U.S. government budget deficit in 2011 was approximately 10% of GDP (8.6% of GDP of which was federal), offsetting a foreign financial surplus of 4% of GDP and a private-sector surplus of 6% of GDP.[31]
Wolf explained in July 2012 that the sudden shift in the private sector from deficit to surplus forced the U.S. government balance into deficit: "The financial balance of the private sector shifted towards surplus by the almost unbelievable cumulative total of 11.2 per cent of gross domestic product between the third quarter of 2007 and the second quarter of 2009, which was when the financial deficit of US government (federal and state) reached its peak.... No fiscal policy changes explain the collapse into massive fiscal deficit between 2007 and 2009, because there was none of any importance. The collapse is explained by the massive shift of the private sector from financial deficit into surplus or, in other words, from boom to bust."[31]
Wolf also wrote that several European economies face the same scenario and that a lack of deficit spending would likely have resulted in a depression. He argued that a private-sector depression (represented by the private- and foreign-sector surpluses) was being "contained" by government deficit spending.[32]
Economist Paul Krugman also explained in December 2011 the causes of the sizable shift from private-sector deficit to surplus in the U.S.: "This huge move into surplus reflects the end of the housing bubble, a sharp rise in household saving, and a slump in business investment due to lack of customers."[33]
One reason why austerity can be counterproductive in a downturn is due to a significant private-sector financial surplus, in which consumer savings is not fully invested by businesses. In a healthy economy, private-sector savings placed into the banking system by consumers are borrowed and invested by companies. However, if consumers have increased their savings but companies are not investing the money, a surplus develops.
Business investment is one of the major components of GDP. For example, a U.S. private-sector financial deficit from 2004 to 2008 transitioned to a large surplus of savings over investment that exceeded $1 trillion by early 2009, and remained above $800 billion into September 2012. Part of this investment reduction was related to the housing market, a major component of investment. This surplus explains how even significant government deficit spending would not increase interest rates (because businesses still have access to ample savings if they choose to borrow and invest it, so interest rates are not bid upward) and how Federal Reserve action to increase the money supply does not result in inflation (because the economy is awash with savings with no place to go).[33]
Economist Richard Koo described similar effects for several of the developed world economies in December 2011: "Today private sectors in the U.S., the U.K., Spain, and Ireland (but not Greece) are undergoing massive deleveraging [paying down debt rather than spending] in spite of record low interest rates. This means these countries are all in serious balance sheet recessions. The private sectors in Japan and Germany are not borrowing, either. With borrowers disappearing and banks reluctant to lend, it is no wonder that, after nearly three years of record low interest rates and massive liquidity injections, industrial economies are still doing so poorly. Flow of funds data for the U.S. show a massive shift away from borrowing to savings by the private sector since the housing bubble burst in 2007. The shift for the private sector as a whole represents over 9 percent of U.S. GDP at a time of zero interest rates. Moreover, this increase in private sector savings exceeds the increase in government borrowings (5.8 percent of GDP), which suggests that the government is not doing enough to offset private sector deleveraging."[34]
Framing of the debate surrounding austerity[edit]
Many scholars have argued that how the debate surrounding austerity is framed has a heavy impact on the view of austerity in the public eye, and how the public understands macroeconomics as a whole. Wren-Lewis, for example, coined the term 'mediamacro', which refers to "the role of the media reproducing particularly corrosive forms of economic illiteracy—of which the idea that deficits are ipso facto 'bad' is a strong example."[35] This can go as far as ignoring economists altogether; however, it often manifests itself as a drive in which a minority of economists whose ideas about austerity have been thoroughly debunked being pushed to the front to justify public policy, such as in the case of Alberto Alesina (2009), whose pro-austerity works were "thoroughly debunked by the likes of the economists, the IMF, and the Centre for Budget and Policy Priorities (CBPP)."[36] Other anti-austerity economists, such as Seymour[37] have argued that the debate must be reframed as a social and class movement, and its impact judged accordingly, since statecraft is viewed as the main goal.
Further, critics such as Major have highlighted how the OECD and associated international finance organisations have framed the debate to promote austerity, for example, the concept of 'wage-push inflation' which ignores the role played by the profiteering of private companies, and seeks to blame inflation on wages being too high.[38]
Empirical considerations[edit]
According to a 2020 study, austerity increases the risk of default in situations of severe fiscal stress, but reduces the risk of default in situations of low fiscal stress.[39]
Europe[edit]
Public Debt to GDP Ratio for Selected European Countries – 2008 to 2012. Source Data: Eurostat
A typical goal of austerity is to reduce the annual budget deficit without sacrificing growth. Over time, this may reduce the overall debt burden, often measured as the ratio of public debt to GDP.[40]
Relationship between fiscal tightening (austerity) in Eurozone countries with their GDP growth rate, 2008–12[41]
Eurozone[edit]
During the European debt crisis, many countries embarked on austerity programs, reducing their budget deficits relative to GDP from 2010 to 2011.
According to the CIA World Factbook, Greece decreased its budget deficit from 10.4% of GDP in 2010 to 9.6% in 2011. Iceland, Italy, Ireland, Portugal, France, and Spain also decreased their budget deficits from 2010 to 2011 relative to GDP[42][43] but the austerity policy of the Eurozone achieves not only the reduction of budget deficits. The goal of economic consolidation influences the future development of the European social model.
With the exception of Germany, each of these countries had public-debt-to-GDP ratios that increased from 2010 to 2011, as indicated in the chart at right. Greece's public-debt-to-GDP ratio increased from 143% in 2010 to 165% in 2011[43] Indicating despite declining budget deficits GDP growth was not sufficient to support a decline in the debt-to-GDP ratio for these countries during this period.
Eurostat reported that the overall debt-to-GDP ratio for the EA17 was 70.1% in 2008, 80.0% in 2009, 85.4% in 2010, 87.3% in 2011, and 90.6% in 2012.[42][44][45]
Further, real GDP in the EA17 declined for six straight quarters from Q4 2011 to Q1 2013.[46]
Unemployment is another variable considered in evaluating austerity measures. According to the CIA World Factbook, from 2010 to 2011, the unemployment rates in Spain, Greece, Ireland, Portugal, and the UK increased. France and Italy had no significant changes, while in Germany and Iceland the unemployment rate declined.[43] Eurostat reported that Eurozone unemployment reached record levels in March 2013 at 12.1%,[47] up from 11.6% in September 2012 and 10.3% in 2011. Unemployment varied significantly by country.[48]
Economist Martin Wolf analyzed the relationship between cumulative GDP growth in 2008 to 2012 and total reduction in budget deficits due to austerity policies in several European countries during April 2012 (see chart at right). He concluded, "In all, there is no evidence here that large fiscal contractions budget deficit reductions bring benefits to confidence and growth that offset the direct effects of the contractions. They bring exactly what one would expect: small contractions bring recessions and big contractions bring depressions."
Changes in budget balances (deficits or surpluses) explained approximately 53% of the change in GDP, according to the equation derived from the IMF data used in his analysis.[49]
Similarly, economist Paul Krugman analyzed the relationship between GDP and reduction in budget deficits for several European countries in April 2012 and concluded that austerity was slowing growth. He wrote: "this also implies that 1 euro of austerity yields only about 0.4 euros of reduced deficit, even in the short run. No wonder, then, that the whole austerity enterprise is spiraling into disaster."[50]
Greece[edit]
See also: Anti-austerity movement in Greece
The Greek government-debt crisis brought a package of austerity measures, put forth by the EU and the IMF mostly in the context of the three successive bailouts the country endured from 2010 to 2018; it was met with great anger by the Greek public, leading to riots and social unrest.[51] On 27 June 2011, trade union organizations began a 48-hour labour strike in advance of a parliamentary vote on the austerity package, the first such strike since 1974.[52]
Massive demonstrations were organized throughout Greece, intended to pressure members of parliament into voting against the package.[53] The second set of austerity measures was approved on 29 June 2011, with 155 out of 300 members of parliament voting in favor.[54] However, one United Nations official warned that the second package of austerity measures in Greece could pose a violation of human rights.[55]
Around 2011, the IMF started issuing guidance suggesting that austerity could be harmful when applied without regard to an economy's underlying fundamentals.[56]
In 2013, it published a detailed analysis concluding that "if financial markets focus on the short-term behavior of the debt ratio, or if country authorities engage in repeated rounds of tightening in an effort to get the debt ratio to converge to the official target", austerity policies could slow or reverse economic growth and inhibit full employment.[57] Keynesian economists and commentators such as Paul Krugman have suggested that this has in fact been occurring, with austerity yielding worse results in proportion to the extent to which it has been imposed.[58][59]
Overall, Greece lost 25% of its GDP during the crisis. Although the government debt increased only 6% between 2009 and 2017 (from €300 bn to €318 bn) — thanks, in part, to the 2012 debt restructuring —,[60][61] the critical debt-to-GDP ratio shot up from 127% to 179%[60] mostly due to the severe GDP drop during the handling of the crisis. In all, the Greek economy suffered the longest recession of any advanced capitalist economy to date, overtaking the US Great Depression. As such, the crisis adversely affected the populace as the series of sudden reforms and austerity measures led to impoverishment and loss of income and property, as well as a small-scale humanitarian crisis.[62][63][64] Unemployment shot up from 8% in 2008 to 27% in 2013 and remained at 22% in 2017.[65] As a result of the crisis, Greek political system has been upended, social exclusion increased, and hundreds of thousands of well-educated Greeks left the country.[66][67]
France[edit]
In April and May 2012, France held a presidential election in which the winner, François Hollande, had opposed austerity measures, promising to eliminate France's budget deficit by 2017 by canceling recently enacted tax cuts and exemptions for the wealthy, raising the top tax bracket rate to 75% on incomes over one million euros, restoring the retirement age to 60 with a full pension for those who have worked 42 years, restoring 60,000 jobs recently cut from public education, regulating rent increases, and building additional public housing for the poor. In the legislative elections in June, Hollande's Socialist Party won a supermajority capable of amending the French Constitution and enabling the immediate enactment of the promised reforms. Interest rates on French government bonds fell by 30% to record lows,[68] fewer than 50 basis points above German government bond rates.[69]
Latvia[edit]
Latvia's economy returned to growth in 2011 and 2012, outpacing the 27 nations in the EU, while implementing significant austerity measures. Advocates of austerity argue that Latvia represents an empirical example of the benefits of austerity, while critics argue that austerity created unnecessary hardship with the output in 2013 still below the pre-crisis level.[70][71] While Anders Åslund maintains[72] that internal devaluation was not opposed by the Latvian public, Jokubas Salyga has recently chronicled[73] widespread protests against austerity in the country.
According to the CIA World Fact Book, "Latvia's economy experienced GDP growth of more than 10% per year during 2006–07, but entered a severe recession in 2008 as a result of an unsustainable current account deficit and large debt exposure amid the softening world economy. Triggered by the collapse of the second largest bank, GDP plunged 18% in 2009. The economy has not returned to pre-crisis levels despite strong growth, especially in the export sector in 2011–12. The IMF, EU, and other international donors provided substantial financial assistance to Latvia as part of an agreement to defend the currency's peg to the euro in exchange for the government's commitment to stringent austerity measures.
The IMF/EU program successfully concluded in December 2011. The government of Prime Minister Valdis Dombrovskis remained committed to fiscal prudence and reducing the fiscal deficit from 7.7% of GDP in 2010, to 2.7% of GDP in 2012." The CIA estimated that Latvia's GDP declined by 0.3% in 2010, then grew by 5.5% in 2011 and 4.5% in 2012. Unemployment was 12.8% in 2011 and rose to 14.3% in 2012. Latvia's currency, the Lati, fell from $0.47 per U.S. dollar in 2008 to $0.55 in 2012, a decline of 17%. Latvia entered the euro zone in 2014.[74] Latvia's trade deficit improved from over 20% of GDP in 2006 to 2007[75] to under 2% GDP by 2012.[74]
Eighteen months after harsh austerity measures were enacted (including both spending cuts and tax increases),[75] economic growth began to return, although unemployment remained above pre-crisis levels. Latvian exports have skyrocketed and both the trade deficit and budget deficit have decreased dramatically. More than one-third of government positions were eliminated, and the rest received sharp pay cuts. Exports increased after goods prices were reduced due to private business lowering wages in tandem with the government.[70][76]
Paul Krugman wrote in January 2013 that Latvia had yet to regain its pre-crisis level of employment. He also wrote, "So we're looking at a Depression-level slump, and 5 years later only a partial bounceback; unemployment is down but still very high, and the decline has a lot to do with emigration. It's not what you'd call a triumphant success story, any more than the partial US recovery from 1933 to 1936—which was actually considerably more impressive—represented a huge victory over the Depression. And it's in no sense a refutation of Keynesianism, either. Even in Keynesian models, a small open economy can, in the long run, restore full employment through deflation and internal devaluation; the point, however, is that it involves many years of suffering".[77]
Latvian Prime Minister Valdis Dombrovskis defended his policies in a television interview, stating that Krugman refused to admit his error in predicting that Latvia's austerity policy would fail.[78] Krugman had written a blog post in December 2008 entitled "Why Latvia is the New Argentina", in which he argued for Latvia to devalue its currency as an alternative or in addition to austerity.[79]
United Kingdom[edit]
Post war austerity[edit]
Further information: Social history of Postwar Britain (1945–1979) § Age of Austerity
Following the Second World War the United Kingdom had huge debts, large commitments, and had sold many income producing assets. Rationing of food and other goods which had started in the war continued for some years.
21st century austerity programme[edit]
Further information: United Kingdom government austerity programme
Following the financial crisis of 2007–2008 a period of economic recession began in the UK. The austerity programme was initiated in 2010 by the Conservative and Liberal Democrat coalition government, despite some opposition from the academic community.[80] In his June 2010 budget speech, the Chancellor George Osborne identified two goals. The first was that the structural current budget deficit would be eliminated to "achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period". The second was that national debt as a percentage of GDP would fall. The government intended to achieve both of its goals through substantial reductions in public expenditure. This was to be achieved by a combination of public spending reductions and tax increases. Economists Alberto Alesina, Carlo A. Favero and Francesco Giavazzi, writing in Finance & Development in 2018, argued that deficit reduction policies based on spending cuts typically have almost no effect on output, and hence form a better route to achieving a reduction in the debt-to-GDP ratio than raising taxes. The authors commented that the UK government austerity programme had resulted in growth that was higher than the European average and that the UK's economic performance had been much stronger than the International Monetary Fund had predicted.[81] This claim was challenged most strongly by Mark Blyth, whose 2014 book on austerity claims that austerity not only fails to stimulate growth, but effectively passes that debt down to the working classes.[82] As such, many academics such as Andrew Gamble view Austerity in Britain less as an economic necessity, and more as a tool of statecraft, driven by ideology and not economic requirements.[83] A study published in The BMJ in November 2017 found the Conservative government austerity programme had been linked to approximately 120,000 deaths since 2010; however, this was disputed, for example on the grounds that it was an observational study which did not show cause and effect.[84][85] More studies claim adverse effects of austerity on population health, which include an increase in the mortality rate among pensioners which has been linked to unprecedented reductions in income support,[86] an increase in suicides and the prescription of antidepressants for patients with mental health issues,[87] and an increase in violence, self-harm, and suicide in prisons.[88][89]
United States[edit]
Further information: Budget Control Act of 2011 and 2013 United States budget sequestration
The United States' response to the 2008 economic crash was largely influenced by Wall Street and IMF interests, who favored fiscal retrenchment in the face of the economic crash. Evidence exists to suggest that Pete Peterson (and the Petersonites) have heavily influenced US policy on economic recovery since the Nixon era,[90] and presented itself in 2008, despite austerity measures being "wildly out of step with public opinion and reputable economic policy...[and showing] anti-Keynesian bias of supply-side economics and a political system skewed to favor Wall Street over Main Street".[91] The nuance of the economic logic of Keynesianism is, however, difficult to put across to the American Public, and compares poorly to the simplistic message which blames government spending, which might explain Obama's preferred position of a halfway point between economic stimulus followed by austerity, which led to him being criticized by economists such as Joseph Stiglitz.[92]
Controversy[edit]
Main article: Anti-austerity movement
See also: Paradox of thrift
Austerity can result in a paradox of thrift.[93][94]
Austerity protest in Athens, 2011
Austerity programs can be controversial. In the Overseas Development Institute (ODI) briefing paper "The IMF and the Third World", the ODI addresses five major complaints against the IMF's austerity conditions. Complaints include such measures being "anti-developmental", "self-defeating", and tending "to have an adverse impact on the poorest segments of the population".
In many situations, austerity programs are implemented by countries that were previously under dictatorial regimes, leading to criticism that citizens are forced to repay the debts of their oppressors.[95][96][97]
In 2009, 2010, and 2011, workers and students in Greece and other European countries demonstrated against cuts to pensions, public services, and education spending as a result of government austerity measures.[98][99]
Following the announcement of plans to introduce austerity measures in Greece, massive demonstrations occurred throughout the country aimed at pressing parliamentarians to vote against the austerity package. In Athens alone, 19 arrests were made, while 46 civilians and 38 policemen had been injured by 29 June 2011. The third round of austerity was approved by the Greek parliament on 12 February 2012 and met strong opposition, especially in Athens and Thessaloniki, where police clashed with demonstrators.
Opponents argue that austerity measures depress economic growth and ultimately cause reduced tax revenues that outweigh the benefits of reduced public spending. Moreover, in countries with already anemic economic growth, austerity can engender deflation, which inflates existing debt. Such austerity packages can also cause the country to fall into a liquidity trap, causing credit markets to freeze up and unemployment to increase. Opponents point to cases in Ireland and Spain in which austerity measures instituted in response to financial crises in 2009 proved ineffective in combating public debt and placed those countries at risk of defaulting in late 2010.[100]
In October 2012, the IMF announced that its forecasts for countries that implemented austerity programs have been consistently overoptimistic, suggesting that tax hikes and spending cuts have been doing more damage than expected and that countries that implemented fiscal stimulus, such as Germany and Austria, did better than expected.[24] These data have been scrutinized by the Financial Times, which found no significant trends when outliers like Germany and Greece were excluded. Determining the multipliers used in the research to achieve the results found by the IMF was also described as an "exercise in futility" by Professor Carlos Vegh of the University of Michigan.[101] Moreover, Barry Eichengreen of the University of California, Berkeley and Kevin H. O'Rourke of Oxford University write that the IMF's new estimate of the extent to which austerity restricts growth was much lower than historical data suggest.[102]
On 3 February 2015, Joseph Stiglitz wrote: "Austerity had failed repeatedly from its early use under US president Herbert Hoover, which turned the stock-market crash into the Great Depression, to the IMF programs imposed on East Asia and Latin America in recent decades. And yet when Greece got into trouble, it was tried again."[103] Government spending actually rose significantly under Hoover, while revenues were flat.[104]
According to a 2020 study, which used survey experiments in the UK, Portugal, Spain, Italy and Germany, voters strongly disapprove of austerity measures, in particular spending cuts. Voters disapprove of fiscal deficits but not as strongly as austerity.[105] A 2021 study found that incumbent European governments that implemented austerity measures in the Great Recession lost support in opinion polls.[106]
Austerity has been blamed for at least 120,000 deaths between 2010 and 2017 in the UK,[107] with one study putting it at 130,000[108] and another at 30,000 in 2015 alone.[109] The first study added that "no firm conclusions can be drawn about cause and effect, but the findings back up other research in the field" and campaigners have claimed that cuts to benefits, healthcare and mental health services lead to more deaths including through suicide.[110]
Balancing stimulus and austerity[edit]
Strategies that involve short-term stimulus with longer-term austerity are not mutually exclusive. Steps can be taken in the present that will reduce future spending, such as "bending the curve" on pensions by reducing cost of living adjustments or raising the retirement age for younger members of the population, while at the same time creating short-term spending or tax cut programs to stimulate the economy to create jobs.[citation needed]
IMF managing director Christine Lagarde wrote in August 2011, "For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans. At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects. So fiscal adjustment must resolve the conundrum of being neither too fast nor too slow. Shaping a Goldilocks fiscal consolidation is all about timing. What is needed is a dual focus on medium-term consolidation and short-term support for growth. That may sound contradictory, but the two are mutually reinforcing. Decisions on future consolidation, tackling the issues that will bring sustained fiscal improvement, create space in the near term for policies that support growth."[111]
Federal Reserve Chair Ben Bernanke wrote in September 2011, "the two goals—achieving fiscal sustainability, which is the result of responsible policies set in place for the longer term, and avoiding creation of fiscal headwinds for the recovery—are not incompatible. Acting now to put in place a credible plan for reducing future deficits over the long term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives."[112]
"Age of austerity"[edit]
Further information: United Kingdom government austerity programme
The term "age of austerity" was popularised by UK Conservative Party leader David Cameron in his keynote speech to the Conservative Party forum in Cheltenham on 26 April 2009, in which he committed to end years of what he called "excessive government spending".[113][114] Theresa May claimed that "Austerity is over" as of 3 October 2018,[115] a statement which was almost immediately met with criticism on the reality of its central claim, particularly in relation to the high possibility of a substantial economic downturn due to Brexit.[116]
Word of the year[edit]
Merriam-Webster's Dictionary named the word austerity as its "Word of the year" for 2010 because of the number of web searches this word generated that year. According to the president and publisher of the dictionary, "austerity had more than 250,000 searches on the dictionary's free online [website] tool" and the spike in searches "came with more coverage of the debt crisis".[117]
Examples of austerity[edit]
Albania — 1962
Argentina — 1952,[118] 1985, 1998–2003, 2012, 2018–2019,[119] 2023– [120]
Australia — 2014[121]
Brazil — 2003–2006, 2015–2018
Canada — 1994
China — 2013[122]
Cuba — 1991–2000, 2008
Czech Republic — 2010
Ecuador — 2017– ,[123]
Estonia — 2007–2009[124]
European countries — 2012[125]
Finland — 1991–1999,[126] 2011–2015,[127] 2015–2019,[128] 2023–[129]
France — 1926–1929, 1932,[130] 1934–1936,[131] 1938–1940,[132] 1958, 1976–1981, 1982–1986, 1995, 2010, 2014[133], 2024
Germany — 1930, 2011[134]
Greece — 2010–2018[135]
Haiti — 1915–1934 (American occupation)[12]
Ireland — 2010–2014
Israel — 1949–1959
Italy — 1922–1925,[11] 2011–2013[136]
Japan — 1949 (American Occupation),[137] 1997–1998, 2010
Latvia — 2009–2013[138]
Mexico — 1985,[139] 2020[140]
Netherlands — 1982–1990, 2003–2006, 2011–2014
Nicaragua — 1997,[141] 2018
Palestinian Authority — 2006[142]
Portugal — 1977–1979, 1983–1985, 2002–2015,[143][144]
Puerto Rico — 2009–2018
Romania — Ceaușescu's 1981–1989 austerity, 2010[145]
Spain — 1979,[146] 2010–2014
Sweden — 1995-1997[147][148]
United States — 1921, 1937, 1946, Omnibus Budget Reconciliation Act of 1993
United Kingdom — during and after the two World Wars, 1976–1979,[149] 2011–2019[150][151]
Venezuela — 1989, 2016[152]
Criticism[edit]
According to economist David Stuckler and physician Sanjay Basu in their study The Body Economic: Why Austerity Kills, a health crisis is being triggered by austerity policies, including up to 10,000 additional suicides that have occurred across Europe and the U.S. since the introduction of austerity programs.[153]
Much of the acceptance of austerity in the general public has centred on the way debate has been framed, and relates to an issue with representative democracy; since the public do not have widely available access to the latest economic research, which is highly critical of economic retrenchment in times of crisis, the public must rely on which politician sounds most plausible.[154] This can unfortunately lead to authoritative leaders pursuing policies which make little, if any, economic sense.
According to a 2020 study, austerity does not pay off in terms of reducing the default premium in situations of severe fiscal stress. Rather, austerity increases the default premium. However, in situations of low fiscal stress, austerity does reduce the default premium. The study also found that increases in government consumption had no substantial impact on the default premium.[39]
Clara E. Mattei, assistant professor of economics at the New School for Social Research, posits that austerity is less of a means to "fix the economy" and is more of an ideological weapon of class oppression wielded by economic and political elites in order to suppress revolts and unrest by the working class public and close off any alternatives to the capitalist system. She traces the origins of modern austerity to post-World War I Britain and Italy, when it served as a "powerful counteroffensive" to rising working class agitation and anti-capitalist sentiment. In this, she quotes British economist G. D. H. Cole writing on the British response to the economic downturn of 1921:
"The big working-class offensive had been successfully stalled off; and British capitalism, though threatened with economic adversity, felt itself once more safely in the saddle and well able to cope, both industrially and politically, with any attempt that might still be made from the labour side to unseat it."[155]
DeLong–Summers condition[edit]
J. Bradford DeLong and Lawrence Summers explained why an expansionary fiscal policy is effective in reducing a government's future debt burden, pointing out that the policy has a positive impact on its future productivity level.[156] They pointed out that when an economy is depressed and its nominal interest rate is near zero, the real interest rate charged to firms
r
f
{\displaystyle r^{f}}
is linked to the output as
∂
r
f
∂
Y
=
−
δ
{\displaystyle {\frac {\partial r^{f}}{\partial Y}}=-\delta }
. This means that the rate decreases as the real GDP increases, and the actual fiscal multiplier
μ
{\displaystyle \mu }
is higher than that in normal times; a fiscal stimulus is more effective for the case where the interest rates are at the zero bound. As the economy is boosted by government spending, the increased output yields higher tax revenue, and so we have
∂
D
∂
G
=
1
−
μ
τ
,
{\displaystyle {\frac {\partial D}{\partial G}}=1-\mu \tau \;,}
where
τ
{\displaystyle \tau }
is a baseline marginal tax-and-transfer rate. Also, we need to take account of the economy's long-run growth rate
g
{\displaystyle g}
, as a steady economic growth rate may reduce its debt-to-GDP ratio. Then we can see that an expansionary fiscal policy is self-financing:[156]
(
r
−
g
)
d
D
−
τ
d
Y
=
(
r
−
g
)
(
1
−
μ
τ
)
d
G
−
τ
η
μ
d
G
{\displaystyle (r-g)dD-\tau dY=(r-g)(1-\mu \tau )dG-\tau \eta \mu dG}
∂
B
∂
G
=
(
r
−
g
)
(
1
−
μ
τ
)
−
τ
η
μ
,
{\displaystyle {\frac {\partial B}{\partial G}}=(r-g)(1-\mu \tau )-\tau \eta \mu \;,}
as long as
∂
B
∂
G
{\displaystyle {\frac {\partial B}{\partial G}}}
is less than zero. Then we can find that a fiscal stimulus makes the long-term budget in surplus if the real government borrowing rate satisfies the following condition:[156]
(
r
−
g
)
(
1
−
μ
τ
)
<
τ
η
μ
{\displaystyle (r-g)(1-\mu \tau )<\tau \eta \mu }
Impacts on short-run budget deficit[edit]
Research by Gauti Eggertsson et al. indicates that a government's fiscal austerity measures actually increase its short-term budget deficit if the nominal interest rate is very low.[157] In normal time, the government sets the tax rates
τ
s
,
τ
i
{\displaystyle \tau _{s},\tau _{i}}
and the central bank controls the nominal interest rate
i
{\displaystyle i}
. If the rate is so low that monetary policies cannot mitigate the negative impact of the austerity measures, the significant decrease of tax base makes the revenue of the government and the budget position worse.[158] If the multiplier is
∂
Y
∂
G
>
γ
=
1
+
τ
s
+
θ
σ
−
1
ψ
τ
i
+
τ
s
+
θ
{\displaystyle {\frac {\partial Y}{\partial G}}>\gamma ={\frac {1+\tau _{s}+\theta \sigma ^{-1}\psi }{\tau _{i}+\tau _{s}+\theta }}}
then we have
∂
D
∂
G
<
0
{\displaystyle {\frac {\partial D}{\partial G}}<0\;}
, where
θ
=
b
Y
(
1
+
i
)
κ
(
1
−
β
μ
)
.
{\displaystyle \theta ={\frac {b}{Y}}(1+i){\frac {\kappa }{(1-\beta \mu )}}\;.}
That is, the austerity measures are counterproductive in the short-run, as long as the multiplier is larger than a certain level
γ
{\displaystyle \gamma }
. This erosion of the tax base is the effect of the endogenous component of the deficit.[158] Therefore, if the government increases sales taxes, then it reduces the tax base due to its negative effect on the demand, and it upsets the budget balance.
No credit risk[edit]
For a country that has its own currency, its government can create credits by itself, and its central bank can keep the interest rate close to or equal to the nominal risk-free rate. Former Federal Reserve chairman Alan Greenspan says that the probability that the US defaults on its debt repayment is zero, because the US government can print money.[159] The Federal Reserve Bank of St. Louis says that the US government's debt is denominated in US dollars; therefore the government will never go bankrupt, though it may introduce the risk of inflation.[159]
Alternatives to austerity[edit]
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A number of alternative plans have been used and proposed as an alternative to implementing austerity measures, examples include:
Infrastructure-based development
New Deal (a series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1939 in response to the Great Depression in the United States).
Alternatives to implementing austerity measures may utilise increased government borrowing in the short-term (such as for use in infrastructure development and public work projects) to attempt to achieve long-term economic growth. Alternately, instead of government borrowing, governments can raise taxes to fund public sector activity.
See also[edit]
Functional finance
Fossil fuel subsidies
Neoliberalism
Planned shrinkage
Programme commun (French reform programme cancelled by austerity turn)
Trickle-down economics
Growth in a Time of Debt
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^ Hübscher, Evelyne; Sattler, Thomas; Wagner, Markus (2020). "Voter Responses to Fiscal Austerity". British Journal of Political Science. 51 (4): 1751–1760. doi:10.1017/S0007123420000320. ISSN 0007-1234.
^ Bojar, Abel; Bremer, Björn; Kriesi, Hanspeter; Wang, Chendi (2021). "The Effect of Austerity Packages on Government Popularity During the Great Recession". British Journal of Political Science. 52: 181–199. doi:10.1017/S0007123420000472. hdl:1814/69865. ISSN 0007-1234.
^ "Landmark study links Tory austerity to 120,000 deaths".
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^ M. Nicolas Firzli & Vincent Bazi. "Infrastructure Investments in an Age of Austerity : The Pension and Sovereign Funds Perspective". Revue Analyse Financière, volume 41 (Q4 2011 ed.). Archived from the original on 17 September 2011. Retrieved 30 July 2011.
^ Inman, Phillip (4 October 2018). "Is austerity really over? Theresa May's promise lacks key details". The Guardian – via www.theguardian.com.
^ Belke, A. Gros, D. The Economic Impact of Brexit: Evidence from Modelling Free Trade Agreements, Atlantic Economic Journal, Vol.45, Issue 3, (Sep 2017) (pp.317–331), p.329
^ Contreras, Russell (20 December 2010). "Audacity of 'austerity,' 2010 Word of the Year". Associated Press. Archived from the original on 4 February 2013. Retrieved 20 December 2010.
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^ "First protests in Argentina against Milei's austerity plan". 21 December 2023. Retrieved 29 December 2023.
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^ Kuokkanen, Anna (19 January 2023). "1990-luvun laman talousopit ja tulevan vaalikauden talouspolitiikka · Kalevi Sorsa -säätiö". Kalevi Sorsa -säätiö (in Finnish). Retrieved 14 May 2023.
^ "Katainen: Uusista sopeutuksista sovittava tänä keväänä". mtvuutiset.fi (in Finnish). 5 February 2014. Retrieved 14 May 2023.
^ Kuokkanen, Anna (19 January 2023). "1990-luvun laman talousopit ja tulevan vaalikauden talouspolitiikka · Kalevi Sorsa -säätiö". Kalevi Sorsa -säätiö (in Finnish). Retrieved 14 May 2023.
^ Henley, Jon; correspondent, Jon Henley Europe (16 June 2023). "Finland's 'most rightwing government ever' to cut spending and immigration". The Guardian. ISSN 0261-3077. Retrieved 2 August 2023.
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^ Leigh Phillips (20 May 2010). "EUobserver / Romania sees biggest protest since 1989 over austerity measures". Euobserver.com. Retrieved 1 July 2011.
^ Salvadó, Francisco J. Romero (1999) Twentieth-century Spain: politics and society in Spain, 1898–1998
^ "Fiscal consolidation in Sweden: A role model?". CEPR. 25 September 2012. Retrieved 15 May 2023.
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^ "Uk contemporary history sourcebook" (PDF). p. 28. Retrieved 7 July 2015.
^ Coates, Sam; Evans, Judith (7 June 2010). "Cameron fingers culprits for Britains 770bn debt pile". The Times. London.
^ James Kirkup (5 January 2014). "George Osborne to cut taxes by extending austerity and creating smaller state". Archived from the original on 6 January 2014. Retrieved 24 October 2015.
^ "Lutte ouvrière". 24 February 2016.
^ Why Austerity Kills: From Greece to U.S., Crippling Economic Policies Causing Global Health Crisis. Democracy Now!. 21 May 2013.
^ Hopkin, J. and Rosamond, B. Post-Truth Politics, Bullshit and Bad Ideas: Deficit Fetishism in the UK, New Political Economy, Issue 23, No.6, (Sep 2017), (pp.641-655), p.645
^ Mattei 2022, pp. 1–7, 288–289.
^ a b c J. DeLong and L. Summers, Brookings Papers on Economic Activity, 233 (2012)
^ M. Denes, G. Eggertsson and S. Gilbukh, Staff report, FRB of New York, 551 (2012)
^ a b G. Eggertsson, German Economic Review, 1, 1 (2013)
^ a b It Is Impossible For The US To Default J. Harvey, Forbes, Leadership, 10 September 2012
Further reading[edit]
Alberto Alesina, Carlo Favero, Francesco Giavazzi. 2019. Austerity: When It Works and When It Doesn't. Princeton University Press.
Bartel, Fritz (2022). The Triumph of Broken Promises: The End of the Cold War and the Rise of Neoliberalism. Harvard University Press. ISBN 9780674976788.
Benjamin Born, Gernot J. Müller and Johannes Pfeifer. 2019. "Does Austerity Pay Off?" Review of Economics and Statistics.
Farrell, Henry; Quiggin, John (2017). "Consensus, Dissensus, and Economic Ideas: Economic Crisis and the Rise and Fall of Keynesianism". International Studies Quarterly. 61 (2): 269–283.
Helgadóttir, Oddný (2016-03-15). "The Bocconi boys go to Brussels: Italian economic ideas, professional networks and European austerity". Journal of European Public Policy. 23 (3): 392–409.
Mattei, Clara E. (2022). The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism. University of Chicago Press. ISBN 978-0226818399.
External links[edit]
Look up austerity in Wiktionary, the free dictionary.
Wikiquote has quotations related to Austerity.
"The Austerity Zone: Life in the New Europe" – videos by The New York Times
Socialist Studies Special Edition on Austerity (2011)
Panic-driven austerity in the Eurozone and its implications Paul De Grauwe, Yuemei Ji, 21 February 2013
NYT Review of Books – Paul Krugman – "How the Case for Austerity Has Crumbled" – June 2013
IMF Working Paper-Olivier Blanchard and Daniel Leigh-Growth Forecast Errors and Fiscal Multipliers-January 2013
"How Austerity Kills". The New York Times. 12 May 2013.
"The Austerity Delusion; Why a Bad Idea Won Over the West" May/June 2013 Foreign Affairs
Video: Richard Koo debates Kenneth Rogoff about the need for austerity, Institute for New Economic Thinking inaugural conference, 22 April 2010
"Debt may be 'Schuld' in German, but it's 'belief' in Italian and 'faith' in English" Interview with Mark Blyth Science Portal L.I.S.A., 26 January 2015
"Austerity's Greek Death Toll: Study Connects Strict Measures to Rise in Suicides". Truthdig. 4 February 2015.
"Hundreds of mental health experts issue rallying call against austerity". The Guardian. 17 April 2015.
Juice Rap News (April 2015). "The EuroDivision Contest", a satire/parody of austerity
"Is austerity the new normal? A look at Greece and France", Tony Cross
"Life Under Austerity". Jacobin. 12 July 2015.
"Austerity policies do more harm than good, IMF study concludes". The Guardian. 27 May 2016.
"When left-leaning parties support austerity, their voters start to embrace the far right". The Washington Post. 20 November 2018
Mongolia Human Development Report 1997, UNDP Mongolia Communications Office, 1997
Modern Mongolia: From Khans to Commissars to Capitalists by Morris Rossabi, University of California Press, 2005
"Mongolians text 'no' to austerity: Vote for investment could prove fillip for stalled mining projects", Financial Times, 4 February 2015
Authority control databases: National
Germany
Retrieved from "https://en.wikipedia.org/w/index.php?title=Austerity&oldid=1212807954"
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Understanding Austerity, Types of Austerity Measures, and Examples
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Table of Contents
What Is Austerity?
How It Works
Special Considerations
Types
Criticism
Examples
Frequently Asked Questions (FAQs)
The Bottom Line
Economy
Monetary Policy
Understanding Austerity, Types of Austerity Measures, and Examples
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What Is Austerity?
The term austerity refers to a set of economic policies that a government implements in order to control public sector debt. Governments put austerity measures in place when their public debt is so large that the risk of default or the inability to service the required payments on its obligations becomes a real possibility.
The goal of austerity is to improve a government's financial health. Default risk can spiral out of control quickly and, as an individual, company, or country slips further into debt, lenders will charge a higher rate of return for future loans, making it more difficult for the borrower to raise capital.
Key Takeaways
Austerity refers to strict economic policies that a government imposes to control growing public debt, defined by increased frugality.There are three primary types of austerity measures: revenue generation (higher taxes) to fund spending, raising taxes while cutting nonessential government functions, and lower taxes and lower government spending.Austerity is controversial, and national outcomes from austerity measures can be more damaging than if they hadn't been used.Many countries, including the United States and Greece, have introduced austerity measures during times of economic uncertainty.
How Austerity Works
Governments experience financial instability when their debt outweighs the amount of revenue they receive, resulting in large budget deficits. Debt levels generally increase when government spending increases. As mentioned above, this means that there is a greater chance that federal governments can default on their debts. Creditors, in turn, demand higher interest to avoid the risk of default on these debts. In order to satisfy their creditors and control their debt levels, they may have to take certain measures.
Austerity only takes place when this gap—between government receipts and government expenditures—shrinks. This situation occurs when governments spend too much or when they take on too much debt. As such, a government may need to consider austerity measures when it owes more money to its creditors than it receives in revenues. Implementing these measures helps put confidence back into the economy while helping restore some semblance of balance to government budgets.
Austerity measures indicate that governments are willing to take steps to bring some degree of financial health back to their budgets. As a result, creditors may be willing to lower interest rates on debt when austerity measures are in place. But there may be certain conditions on these moves.
For instance, interest rates on Greek debt fell following its first bailout. However, the gains were limited to the government having decreased interest rate expenses. Although the private sector was unable to benefit, the major beneficiaries of lower rates are large corporations. Consumers benefited only marginally from lower rates, but the lack of sustainable economic growth kept borrowing at depressed levels despite the lower rates.
Special Considerations
A reduction in government spending doesn't simply equate to austerity. In fact, governments may need to implement these measures during certain cycles of the economy.
For example, the global economic downturn that began in 2008 left many governments with reduced tax revenues and exposed what some believed were unsustainable spending levels. Several European countries, including the United Kingdom, Greece, and Spain, turned to austerity as a way to alleviate budget concerns.
Austerity became almost imperative during the global recession in Europe, where eurozone members didn't have the ability to address mounting debts by printing their own currency. Thus, as their default risk increased, creditors put pressure on certain European countries to aggressively tackle spending.
Types of Austerity
Broadly speaking, there are three primary types of austerity measures:
Generating revenue generation through higher taxes: This method often supports more government spending. The goal is to stimulate growth with spending and capture benefits through taxation.
The Angela Merkel model: Named after the German chancellor, Angela Merkel, this measure focuses on raising taxes while cutting nonessential government functions.
Lower taxes and lower government spending: This is the preferred method of free-market advocates.
Taxes
There is some disagreement among economists about the effect of tax policy on the government budget. Former Ronald Reagan adviser Arthur Laffer famously argued that strategically cutting taxes would spur economic activity, paradoxically leading to more revenue.
Still, most economists and policy analysts agree that raising taxes will raise revenues. This was the tactic that many European countries took. For example, Greece increased value-added tax (VAT) rates to 23% in 2010. The government raised income tax rates on upper-income scales, along with adding new property taxes.
Reducing Government Spending
The opposite austerity measure is reducing government spending. Most consider this to be a more efficient means of reducing the deficit. New taxes mean new revenue for politicians, who are inclined to spend it on constituents.
Spending takes many forms, including grants, subsidies, wealth redistribution, entitlement programs, paying for government services, providing for the national defense, benefits to government employees, and foreign aid. Any reduction in spending is a de facto austerity measure.
At its simplest, an austerity program that is usually enacted by legislation may include one or more of the following measures:
A cut or a freeze—without raises—of government salaries and benefits
A freeze on government hiring and layoffs of government workers
A reduction or elimination of government services, temporarily or permanently
Government pension cuts and pension reform
Interest on newly issued government securities may be cut, making these investments less attractive to investors, but reducing government interest obligations
Cuts to previously planned government spending programs such as infrastructure construction and repair, health care, and veterans' benefits
An increase in taxes, including income, corporate, property, sales, and capital gains taxes
A reduction or increase in the money supply and interest rates by the Federal Reserve as circumstances dictate to resolve the crisis.
Rationing of critical commodities, travel restrictions, price freezes, and other economic controls, particularly in times of war
Criticism of Austerity
The effectiveness of austerity remains a matter of sharp debate. While supporters argue that massive deficits can suffocate the broader economy, thereby limiting tax revenue, opponents believe that government programs are the only way to make up for reduced personal consumption during a recession. Cutting government spending, many believe, leads to large-scale unemployment. Robust public sector spending, they suggest, reduces unemployment and therefore increases the number of income-tax payers.
Although austerity measures may help restore financial health to a nation's economy, reduced government spending may lead to higher unemployment.
Economists such as John Maynard Keynes, a British thinker who fathered the school of Keynesian economics, believe that it is the role of governments to increase spending during a recession to replace falling private demand. The logic is that if demand is not propped up and stabilized by the government, unemployment will continue to rise and the economic recession will be prolonged.
But austerity runs contradictory to certain schools of economic thought that have been prominent since the Great Depression. In an economic downturn, falling private income reduces the amount of tax revenue that a government generates. Likewise, government coffers fill up with tax revenue during an economic boom. The irony is that public expenditures, such as unemployment benefits, are needed more during a recession than a boom.
Examples of Austerity
United States
A model of austerity in response to a recession, occurred in the United States between 1920 and 1921. The unemployment rate in the U.S. economy jumped from 4% to almost 12%. Real gross national product (GNP) declined almost 20% over that time—greater than any single year during the Great Depression or Great Recession except for 1931-1932, when it declined just over 25%.
In a speech in 1920, presidential candidate Warren Harding declared that his administration "will attempt intelligent and courageous deflation, and strike at government borrowing...[and] will attack high cost of government with every energy and facility." After he became president, Harding implemented federal spending decreases and tax cuts to fight the recession, following austerity measures already implemented under President Woodrow Wilson. However, economists and historians argue over whether the austerity measures were necessary, as the economy had already begun to improve by the time Harding took office. Some economists also question whether Harding's measures can be considered austerity measures, as they actually ended up increasing federal tax revenues.
Greece
In exchange for bailouts after the Great Recession, the EU and European Central Bank (ECB) embarked on an austerity program that sought to bring Greece's finances under control. The program cut public spending and increased taxes often at the expense of Greece's public workers and was very unpopular. Since then, Greece's deficit has dramatically decreased. The austerity program that the country enacted in 2010, however, provided only mixed benefits to its economy.
Mainly, austerity measures failed to improve the financial situation in Greece because the country struggled in the past with a lack of aggregate demand. Aggregate demand declines with austerity. Structurally, Greece is a country of small businesses rather than large corporations, so it benefits less from the principles of austerity, such as lower interest rates. These small companies do not benefit from a weakened currency, as they are unable to become exporters.
While most of the world followed the financial crisis in 2008 with years of lackluster growth and rising asset prices, Greece remained mired in its own depression. Greece's gross domestic product (GDP) in 2010 was $299.36 billion. In 2014, its GDP was $235.57 billion according to the United Nations. This is staggering destruction in the country's economic fortunes, akin to the Great Depression in the United States in the 1930s.
Greece's problems began following the Great Recession, as the country was spending too much money relative to tax collection. As the country's finances spiraled out of control and interest rates on sovereign debt exploded higher, the country was forced to seek bailouts or default on its debt.
What Is a Budget Deficit?
A budget deficit happens when spending is higher than revenue. For a country, this means that its spending is higher than the money is takes in, usually from taxes. When this happens, governments must borrow money, usually by issuing bonds. This increases the country's national debt.
What Happens When a Country Defaults?
Sovereign default happens when a country cannot pay its debts. Unlike when an individual defaults, a country cannot be forced to pay its debts. But default can cause other economic problems. It may trigger a recession or cause the country's currency to lose value. A country that defaults may also struggle to borrow money in the future because it is seen as a bad economic risk.
Do Austerity Measures Work?
Economists disagree on whether austerity measures work as they are intended to. Supporters of austerity measures argue that large deficits are damaging to the broader economy, which can limit tax revenue. Austerity, under this argument, is effective because it lowers government spending and decreases deficits. Opponents argue that during a recession, austerity is harmful because more people are in need of assistance. Government spending, according to this argument, lowers unemployment, which increases tax revenue and reduces deficits.
The Bottom Line
Austerity measures are strict, frugal economic policies used by governments to manage public debt. There are three main types: higher taxes (revenue generation) to fund government spending, revenue generation plus lower government spending, and lower taxes plus lower government spending.
Austerity has been used in many countries, such as the United States and Greece. But it is a controversial policy. Depending on the overall economic situation and its causes, austerity may improve an economy or cause further damage.
Article Sources
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International Monetary Fund. "The IMF and the Greek Crisis: Myths and Realities."
National Museum of American History. "Laffer Curve Napkin."
International Monetary Fund. "Greece: Staff Report on Request for Stand-By Arrangement," Page 11.
International Monetary Fund. "Greece: Ex Post Evaluation of Exceptional Access Under the 2010 Stand-By Arrangement," Page 14.
National Bureau of Economic Research (NBER). "Annual Estimates of Unemployment in the United States, 1900-1954," Page 215.
Federal Reserve Bank of St. Louis. "Gross National Product."
Federal Reserve Bank of St. Louis. "Gross National Product in Current Prices for United States 1919-1955."
UC Santa Barbara, The American Presidency Project. "Warren G. Harding 29th President of the United States: 1921 ‐ 1923 Address Accepting the Republican Presidential Nomination in Marion, Ohio."
Berkeley Economic Review. "In the Shadow of the Slump: The Depression of 1920-1021."
Fitch Rating. "Energy Shock Slows Pace of Greece’s Fiscal Deficit Reduction."
International Monetary Fund. "Greece: Ex Post Evaluation of Exceptional Access Under the 2010 Stand-By Arrangement," Page 1-2.
The World Bank. "GDP (current US$) - Greece."
Part Of
Guide to Economic Depression
Depression in the Economy: Definition and Example
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What Is Economic Collapse? Definition and How It Can Occur
2 of 14
Business Cycle: What It Is, How to Measure It, the 4 Phases
3 of 14
Boom And Bust Cycle: Definition, How It Works, and History
4 of 14
Negative Growth: Definition and Economic Impact
5 of 14
The Great Depression: Overview, Causes, and Effects
6 of 14
Were There Any Periods of Major Deflation in U.S. History?
7 of 14
The Greatest Generation: Definition and Characteristics
8 of 14
A History of U.S. Government Financial Bailouts
9 of 14
Understanding Austerity, Types of Austerity Measures, and Examples
10 of 14
The New Deal: Meaning, Overview, History
11 of 14
The Economic Effects of the New Deal
12 of 14
Gold Reserve Act of 1934: Meaning, History
13 of 14
Emergency Banking Act of 1933: Definition, Purpose, Importance
14 of 14
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erity | Economics, Government Spending & Social Policy | Britannica MoneyHistory & SocietyScience & TechBiographiesAnimals & NatureGeography & TravelArts & CultureGames & QuizzesVideosOn This DayOne Good FactDictionaryLifestyles & Social IssuesPhilosophy & ReligionPolitics, Law & GovernmentWorld HistoryHealth & MedicineScienceTechnologyBrowse BiographiesBirds, Reptiles & Other VertebratesBugs, Mollusks & Other InvertebratesEnvironmentFossils & Geologic TimeMammalsPlantsGeography & TravelEntertainment & Pop CultureLiteratureSports & RecreationVisual ArtsCompanionsDemystifiedImage GalleriesInfographicsListsPodcastsSpotlightSummariesThe ForumTop Questions#WTFact100 WomenBritannica KidsSaving EarthSpace Next 50Student CenterSubscribe NowMoney HomeHousehold FinanceInvestingRetirementHistory & TheoryTable of ContentsExternal WebsitesTable Of ContentsHistory & TheoryausterityeconomicsAlso known as: austerity measuresWritten byPeter BondarenkoPeter BondarenkoFormer Assistant Editor, Economics, Encyclopædia Britannica.Fact-checked byThe Editors of Encyclopaedia BritannicaThe Editors of Encyclopaedia BritannicaEncyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree. They write new content and verify and edit content received from contributors.Table of ContentsExternal WebsitesTable Of ContentsOpen full sized imageCrowds standing in line at automatic teller machines (ATMs) in Greece.© Ververidis Vasilis/Shutterstock.com also called:austerity measuresausterity, a set of economic policies, usually consisting of tax increases, spending cuts, or a combination of the two, used by governments to reduce budget deficits.Austerity measures can in principle be used at any time when there is concern about government expenditures exceeding government revenues. Often, however, governments delay resorting to such measures because they are usually politically unpopular. Instead, governments tend to rely on other means—for example, deficit financing, which involves borrowing from financial markets—to mitigate budget deficits in the short run, a decision that usually necessitates the adoption of harsher austerity measures in the long run.Historically, austerity measures have usually been implemented during times of economic crisis, when they are easier for governments to justify to their electorates and when they are often necessary to maintain a country’s credit worthiness in the eyes of lenders. During Argentina’s economic crisis in 1998–2002, the country adopted severe austerity measures, largely following the advice of its major creditor, the International Monetary Fund (IMF); they included cuts in government pensions and salaries and in numerous social programs, as well as significant tax increases. In return, the IMF agreed to extend a low-interest loan to the Argentine government to help its ailing economy. Russia and Turkey underwent similar hardships during their economic crises in 1998 and 2001, respectively. In Europe the Great Recession of 2007–09 forced many euro-zone countries (the countries that use the euro) to adopt similar austerity packages. Greece, Portugal, Spain, Ireland, Italy, and the United Kingdom implemented serious belt-tightening policies that involved severe cuts in social programs and concurrent tax hikes.The use of austerity measures during times of economic hardship has caused much controversy about their purpose and usefulness. Many economists have pointed out that the measures have contractionary effects and usually exacerbate ongoing economic recessions. In fact, in many parts of the world, austerity measures imposed in the aftermath of economic crises have not helped countries move out of recession faster and have resulted in major public outrage and protests. In Argentina, Russia, and Turkey, for example, many high-level government officials resigned when mistimed austerity packages did more harm than good for their economies. Protests led by indignados (indignant citizens) erupted in Spain in May 2011, mainly fueled by the Spanish government’s decision to cut public spending for social programs. In Greece the Indignant Citizens Movement helped gather more than 300,000 people in front of the Greek parliament on June 5, 2011, resulting in months of protests, sit-ins, and sometimes-violent clashes with the police. The events in Greece eventually led to the defeat of the New Democracy party and a first-time victory for Syriza, whose major campaign promise had been to end austerity programs. Similar protests took place in Ireland, the United Kingdom, and other parts of Europe in 2010–11, usually resulting in the resignation of key government officials.Peter BondarenkoBritannica MoneyHousehold FinanceInvestingRetirementHistory & TheoryAbout UsPrivacy PolicyTerms & Conditions© 2024 Encyclopædia Britannica, Inc.AUSTERITY Definition & Usage Examples | Dictionary.com
AUSTERITY Definition & Usage Examples | Dictionary.com
GamesDaily CrosswordWord PuzzleWord FinderAll gamesFeaturedWord of the DaySynonym of the DayWord of the YearNew wordsLanguage storiesAll featuredPop cultureSlangEmojiMemesAcronymsGender and sexualityAll pop cultureWriting tipsGrammar Coach™Writing hubGrammar essentialsCommonly confusedAll writing tipsGamesFeaturedPop cultureWriting tipsausterity[ aw-ster-i-tee ]show ipaSee synonyms for austerity on Thesaurus.comnoun,plural aus·ter·i·ties.austere quality; severity of manner, life, etc.; sternness.Usually austerities. ascetic practices: austerities of monastery life.harsh economic policies, as increased taxes or decreased funding for social services, usually adopted in response to government debt or deficits (often used attributively): Economic growth slowed under austerity.The legislature tried to reduce the budget deficit with austerity measures that raised the retirement age and cut pension benefits.See moreOrigin of austerity1First recorded in 1300–50; Middle English austerite , from Anglo-French, Old French austerite , from Latin austēritās; see austere, -itysynonym study For austerity2. See hardship. Other words for austerity1 harshness, strictness, asceticism, rigorSee synonyms for austerity on Thesaurus.comOpposites for austerity1 leniencySee antonyms for austerity on Thesaurus.comWords Nearby austerityaustenitic stainless steelaustenitizeAusten, JaneAusteraustereausterityAusterlitzAustinAustin friaraustr-australDictionary.com Unabridged
Based on the Random House Unabridged Dictionary, © Random House, Inc. 2024How to use austerity in a sentenceAmid the economic crisis, with memories of austerity measures from past years still fresh, the nation voted to slash public spending on governance by chopping the size of its legislatures by a third.The New Meaning of Citizenship | Daniel Malloy | December 13, 2020 | OzyThis is a non-starter in the post-pandemic age of austerity.The Self-Driving Car Is a Red Herring - Issue 92: Frontiers | Anthony Townsend | October 21, 2020 | NautilusEconomic stability was promptly replaced by recession and austerity in financial capitals and small towns around the world.How digitalization could help American states and cities bounce back from the COVID recession | matthewheimer | October 7, 2020 | FortuneThough DeJoy put some austerity measures on hold — since backstopped by four court orders — and called the timely delivery of election mail his “sacred” duty, suspicions persist.In Detroit, chronic USPS delays undermine voters’ confidence in voting by mail | Lisa Rein, Kayla Ruble | October 5, 2020 | Washington PostEducation leaders immediately compared it to the devastating austerity of the Great Recession.How Los Angeles and San Diego Unified Started Driving State Education Policy | Will Huntsberry | July 29, 2020 | Voice of San DiegoNow cities are largely on their own, as austerity and gridlock grip Washington.Can America’s Favorite Ex-Con Mayor Win Again? | David Freedlander | June 22, 2014 | THE DAILY BEASTOur debates about federal budgets still revolve around degrees of imposed austerity.The Tea Party Is Dead? Nah, That’s Just a Flesh Wound | Michael Tomasky | May 20, 2014 | THE DAILY BEASTLast weekend, demonstrators took to the streets of Italy's capital to protest against government-imposed austerity measures.Portrait of a Roman Crackdown | The Daily Beast Video | April 18, 2014 | THE DAILY BEASTA big theme for the last several months has been the end of fiscal austerity.Finally: An Unusually Awesome Jobs Report | Daniel Gross | December 6, 2013 | THE DAILY BEASTWalmart is about to teach everybody a lesson in how austerity can affect the consumer economy—and quick.Food Stamp Cuts Add to Walmart’s Troubles | Daniel Gross | November 2, 2013 | THE DAILY BEASTIt now became evident to him that both he and the Brethren had hitherto manifested insufficient austerity in life and doctrine.Skipper Worse | Alexander Lange Kiellandausterity banishes familiarity from family life and engenders constraint.Friend Mac Donald | Max O'RellThe extreme plainness of her dress lent an air of austerity to her face, and her features were proud and grave.An Episode Under the Terror | Honore de BalzacThis proposal is, in our judgment, a bold attempt to get back the "Principles of 1834" in all their austerity.English Poor Law Policy | Sidney WebbShe viewed life with a certain austerity, and in literature she had fortified herself against the shocks of time.A Hoosier Chronicle | Meredith NicholsonSee More ExamplesBritish Dictionary definitions for austerityausterity/ (ɒˈstɛrɪtɪ) /nounplural -tiesthe state or quality of being austere(often plural) an austere habit, practice, or actreduced availability of luxuries and consumer goods, esp when brought about by government policy(as modifier): an austerity budgetSee moreCollins English Dictionary - Complete & Unabridged 2012 Digital Edition
© William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins
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austerity noun - Definition, pictures, pronunciation and usage notes | Oxford Advanced Learner's Dictionary at OxfordLearnersDictionaries.com
austerity noun - Definition, pictures, pronunciation and usage notes | Oxford Advanced Learner's Dictionary at OxfordLearnersDictionaries.com
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Definition of austerity noun from the Oxford Advanced Learner's Dictionary
austerity noun /ɒˈsterəti/, /ɔːˈsterəti/ /ɔːˈsterəti/(plural austerities)
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[uncountable] difficult economic conditions created by government policies aimed at cutting public spendingWar was followed by many years of austerity.austerity measures and economic reformsOxford Collocations Dictionaryadjectivepost-warwartimeeconomic…austerity + nounmeasuresplanpolicies…See full entry
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[uncountable] the quality of being simple and plain in appearancethe pleasing austerity of the design
[uncountable] the quality of being strict and serious in appearance or mannerHe was noted for his austerity and authoritarianism. [uncountable] the fact of allowing no pleasures and little to make life comfortablethe austerity of the monks’ life [countable, usually plural] something that is part of a way of life that allows no pleasures and little to make life comfortablethe austerities of wartime Europe Word Originlate Middle English: from French austérité, from Latin austeritas, from austerus, from Greek austēros ‘severe’.See austerity in the Oxford Advanced American DictionaryCheck pronunciation:
austerity
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austere adjective
austerely adverb
austerity noun
Austin noun
austral adjective
boost
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Austerity Definition & Meaning | Britannica Dictionary
Austerity Definition & Meaning | Britannica Dictionary
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austerity
1 ENTRIES FOUND:
austerity (noun)
austerity
/ɑˈsterəti/
noun
plural
austerities
austerity
/ɑˈsterəti/
noun
plural
austerities
Britannica Dictionary definition of AUSTERITY
1
[noncount]
:
a simple and plain quality
:
an austere quality
the austerity of the design
The austerity of their lifestyle was surprising.
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2
[noncount]
:
a situation in which there is not much money and it is spent only on things that are necessary
They lived through years of austerity after the war.
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— often used before another noun
The government has announced a series of austerity measures. [=things done to save money during difficult economic times]
an austerity program
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3
austerities
[plural]
:
things that are done to live in a simple and plain way
the austerities practiced by monks
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