Austerity


Austerity

In economics, austerity is when a national government reduces its spending in order to pay back creditors. Austerity is usually required when a government's fiscal deficit spending is felt to be unsustainable.

Development projects, welfare programs and other social spending are common areas of spending for cuts. In many countries, austerity measures have been associated with short-term standard of living declines until economic conditions improved once fiscal balance was achieved (such as in the United Kingdom under Margaret Thatcher, Canada under Jean Chrétien, and Spain under González).

Private banks, or institutions like the International Monetary Fund (IMF), may require that a country pursues an 'austerity policy' if it wants to re-finance loans that are about to come due. The government may be asked to stop issuing subsidies or to otherwise reduce public spending. When the IMF requires such a policy, the terms are known as 'IMF conditionalities'.

Austerity programs are frequently controversial, as they impact the poorest segments of the population and often lead to a wider separation between the rich and poor. In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors. [Harvey, D (2005) A Brief History of Neoliberalism] [Klein, N. (2007) The Shock Doctrine] [Chomsky, N (2004) Hegemony or Survival]

Examples of austerity

* Austerity in Israel (1949-1959)
* Special Period (Cuba, 1991 onwards, after the collapse of the Soviet Union)
* Post-War United Kingdom "see",: , Rationing in the United Kingdom, Utility furniture.

References


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  • austerity — aus‧ter‧i‧ty [ɔːˈsterti, ɒ ǁ ɒː ] noun [uncountable] ECONOMICS bad economic conditions in which people do not have much money to spend: • her childhood memories of war time austerity * * * austerity UK US /ɒsˈterəti/ noun [U] ► ECONOMICS,… …   Financial and business terms

  • Austerity — Aus*ter i*ty, n.; pl. {Austerities}. [F. aust[ e]rit[ e], L. austerias, fr. austerus. See {Austere}.] 1. Sourness and harshness to the taste. [Obs.] Horsley. [1913 Webster] 2. Severity of manners or life; extreme rigor or strictness; harsh… …   The Collaborative International Dictionary of English

  • austerity — [n1] severity acerbity, asperity, astringence, coldness, exactingness, exactness, formality, formalness, gravity, grimness, hardness, harshness, inclemency, inflexibility, obduracy, rigidity, rigor, seriousness, solemnity, sternness, stiffness,… …   New thesaurus

  • austerity — I noun abstemiousness, austeritas, bare subsistence, chariness, closed purse, economicalness, economy, frugality, frugalness, good management, husbandry, lack of luxury, meagerness, scantiness, scrimping, self denial, self restraint, severe… …   Law dictionary

  • austerity — /ɔ: steriti/, it. /au stɛriti/ s. ingl. (propr. austerità ) usato in ital. al femm. (econ., polit.) [assol., regime di restrizione delle spese statali e dei consumi privati: un periodo di a. ] ▶◀ austerità, economia, risparmio. ◀▶ consumismo,… …   Enciclopedia Italiana

  • austerity — (n.) mid 14c., sternness, harshness, from O.Fr. austerite harshness, cruelty (14c.) and directly from L.L. austeritatem (nom. austeritas), from austerus (see AUSTERE (Cf. austere)). Of severe self discipline, from 1580s; hence severe simplicity… …   Etymology dictionary

  • austerity — /ausˈtɛriti, ingl. Hːˈstɛrɪtɪ/ [vc. ingl., dal fr. austérité, dal lat. austeritāte(m) «austerità»] s. f. inv. austerità, restrizione …   Sinonimi e Contrari. Terza edizione

  • austerity — [ô ster′ə tē] n. pl. austerities 1. the quality or condition of being austere 2. an austere act, habit, practice, or manner 3. tightened economy, as because of shortages of consumer goods …   English World dictionary

  • austerity — aus|ter|i|ty [o:ˈsterıti, ɔ US o: ] n plural austerities 1.) [C usually plural, U] bad economic conditions in which people do not have much money to spend ▪ a time of great austerity after the war ▪ the austerities of post communist Eastern… …   Dictionary of contemporary English

  • austerity — [[t]ɔːste̱rɪti[/t]] austerities 1) N UNCOUNT: also N in pl, oft N n Austerity is a situation in which people s living standards are reduced because of economic difficulties. ...an economic austerity programme. ...the years of austerity which… …   English dictionary


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