Public Spending Cuts Research Articles

Fiscal consolidation and voting: on the electoral costs of budgetary stability

AbstractIn this paper, we analyse the potential impact of policies aimed at fostering fiscal sustainability on citizens’ preferences. A survey specifically designed for this purpose quantifies citizens’ knowledge and concern about fiscal imbalances and the institutional framework that addresses them in Spain, and their possible electoral reactions to public spending cuts and tax increases. Using both ordered and unordered multinomial probit models, we corroborate that citizens tend to disapprove of retrenchment policies. However, the effect on citizens’ voting intentions varies depending on their political ideology. We confirm that left‐wing voters supporting the incumbent coalition parties prefer austerity policies based on the revenue side of the budget, while right‐wing voters tend to approve retrenchments based on the expenditure side to a larger extent.

Out-of-pocket expenditure and mortality in the elderly in Europe: a longitudinal analysis, 2006-20

Abstract Background European Health Systems are increasingly considering the implementation of cost-sharing policies to compensate cuts in public health spending. However, out-of-pocket expenditure (OOPE) has been associated with delay in seeking care, especially in the elderly population, with negative effects on health. This is the first study to assess the relationship between OOPE and mortality in European Health Systems. Methods Longitudinal analysis of 11 European Health Systems between 2006 and 2020 using data from the Survey of Health, Ageing, and Retirement in Europe. Total OOPE, OOPE on medicine, outpatient, and inpatient were the main variables of interest. Covariates included multimorbidity, age, sex, marital status, residential country, educational attainment, and household income. To model the association between OOPE and mortality we employed mixed-effect parametric survival models with Gompertz distribution. Analyses were stratified by income quintiles and sensitivity analyses were conducted with time-varying independent variables. Results Study population included 70367 respondents, average age was 65 year (±14.1), 53.7% were female, and average number of chronic disease was 1.6 (±2.6). 60.1% of the sample paid OOPE, 41.2% more than 100 euros in a year. For each 100 euro increase in OOPE we found a 1% increase in mortality over the study period (HR 1.01, 95%CI 1.01-1.01), with little difference when stratifying analyses by income quintiles. The largest effect was found for OOPE on medicine (HR 1.04, 95%CI 1.02-1.06), while the smallest for OOPE on inpatient (HR 1.02, 95%CI 1.01-1.03), although it was much larger when restricting analyses to only those in the lowest income quintile (HR 1.08, 95% 1.92-1.12). Time-varying analyses confirmed main findings. Conclusions Cost-sharing policies, especially on medicine, increase the risk of mortality in elderly people in Europe. For certain health services the association might affect especially the most disadvantaged groups. Key messages • For each 100 euro increase in OOPE we found a 1% increase in mortality for elderly people in Europe over the study period, with little difference when stratifying analyses by income quintiles. • The largest effect was found for OOPE on medicine, while the smallest for OOPE on inpatient, although it was much larger when restricting analyses to only those in the lowest income quintile.

Adapting a Dutch Web-Based Intervention to Support Family Caregivers of People With Dementia in the UK Context: Accelerated Experience-Based Co-Design.

Around 700,000 family caregivers provide unpaid care for 900,000 people living with dementia in the United Kingdom. Few family caregivers receive support for their own psychological needs and funding for community respite services has declined. These trends are seen across Europe as demographic and budgetary pressures have intensified due to public spending cuts arising from the 2008 financial crisis and the COVID-19 pandemic. The World Health Organization has prioritized the need to expand the provision of support for caregivers and families of people with dementia by 2025. Web-based interventions have the potential for development as they require modest investment and can be accessed by family caregivers at home. Further cost benefits can be realized by adapting existing interventions with demonstrated effectiveness for new contexts. This paper reports initial findings from the CareCoach study, which is adapting Partner in Balance (PiB), a web-based coaching intervention developed in the Netherlands, for family caregivers in the United Kingdom. This study aims to work with unpaid family caregivers and staff in adapting the Dutch web-based support tool PiB to improve its acceptability and usability for use in the United Kingdom. Accelerated Experience-Based Co-Design (AEBCD) was used with caregivers, staff, and core stakeholders. Interviews, workshops, and stakeholder consultations were conducted. Data were analyzed iteratively. Recommendations for the redesign of PiB for use across the United Kingdom were adjudicated by the study Adaptation Working Party. Sixteen caregivers and 17 staff took part in interviews. Thirteen caregivers and 17 staff took part in workshops. Most (n=26) participants were White, female, and retired. All except 4 caregivers (2 male and 2 female) found the PiB's offer of web-based self-help learning acceptable. Caregivers identified complexity and lack of inclusivity in some wording and video resources as problematic. The staff took a stronger perspective on the lack of inclusivity in PiB video resources. Staff and caregivers coproduced new inclusive wording and recommended creating new videos to adapt PiB for the UK context. AEBCD methods facilitated the engagement of caregivers and staff and advanced the adaptation of the PiB complex intervention. An important addition to the AEBCD method in this process was the work of an Adaptation Working Party, which adjudicated and agreed to new wording where this could not be established in consultation with caregivers and staff. ISRCTN Registry ISRCTN12540555; https://doi.org/10.1186/ISRCTN12540555.

Leveraging land-value capture in contexts of urban austerity: evidence from the Grand Paris Express (France)

ABSTRACT Austerity urbanism has emerged as a powerful concept to explore the political and socio-spatial consequences of cuts in public spending, but interrogations remain regarding public actors’ shifting role in urban production in times of increased budgetary constraints. This article focuses on Land Value Capture (LVC), a financing mechanism that has been gaining traction amongst scholars and practitioners alike. While LVC can be framed as a valuable tool to finance infrastructure provision in times of austerity, we argue that the existing literature has neglected its use by other public actors, for the funding of other urban projects. Indeed, we analysed how different public actors (public landowners, land developers, and local governments) sought to take advantage of the anticipated rise in land value around future stations of the new urban railway system surrounding Paris, the Grand Paris Express. Through an exploration of four case studies, we show that LVC can be a flexible instrument that allows actors to either play into, or mitigate austerity-driven urban policies in French cities.

Women's leadership and the gendered consequences of austerity in the public sector: Evidence from IMF programs

AbstractDuring times of economic turmoil, women often bear the cost of cuts in public spending and labor market deregulation. We argue that the adverse gendered consequences of austerity are mitigated when women occupy more political leadership positions. We test our argument using two independent sources of evidence. First, we use cross‐country time‐series data for 95 countries from 2000 to 2018 on public‐sector employment outcomes and panel regressions to show that women leaders mitigate the adverse consequences of IMF programs for women in the public sector. Second, we use individual‐level data from the World Values Surveys covering 50 countries from 2004 to 2015 to show that women in the public sector are more likely to fear job loss and endure income loss under IMF programs when the women share in the government of their country is low but that these adverse effects disappear once women are represented in the government. These results have important implications for debates on women's leadership as well as the impact of austerity on the public sector.

THE MACROECONOMIC EFFECTS OF RE-APPLYING THE EU FISCAL RULES: RETURNING TO THE STATUS QUO ANTE OR MOVING TO EXPENDITURE RULES?

AbstractAgainst the background of the European Commission’s reform plans of the Stability and Growth Pact, this paper uses NiGEM to simulate the macroeconomic implications of re-applying the fiscal rules in 2024. Next to returning to the unreformed rules, the most prominent options include an expenditure rule. Our results indicate that re-applying the unreformed rules leads to severe cuts in public spending. An expenditure rule would, however, not necessarily alleviate the fiscal adjustment burden. Instead, our simulations show that great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way.

Resilience, responsibility and state abandon: The changing role of the government in emergencies

Scholars have explored how governmental agendas pursued in the name of resilience redistribute the responsibility for attending to emergencies amongst governments and communities. In this paper, we draw on two years of research with community groups responding to Covid-19 in the United Kingdom to deepen these debates concerning the effects of so-called 'responsibilization' amid appeals for resilience. Against popular claims that equate resilience to state abandonment in an era of neo-liberal reform, we argue that resilience has also prompted new forms of coordination between government and non-government community actors that in themselves are fraught with political complications warranting critical scrutiny. After years of public spending cuts, the government increasingly plays an enabler role in emergencies; orchestrating other actors rather than directly intervening themselves. This role is important to consider because it reshapes people's affective encounter with the figure of ‘the government’ when emergencies happen by sequestering the government's activities and generating feelings of government inaction. With the government's obfuscation, community actors valorise their own interpretation of 'resilience' as a way to deal with emergencies without government support, despite the government's ongoing presence. This belief in successful non-state resilience could have grave consequences if it is used to justify future government-led attempts to accelerate a long-established policy of reducing expenditure on public services, thus engendering in the future the very state abandon through which some scholars diagnose the present. Overall, the paper challenges popular conceptualisations of the re-distribution of responsibility under resilience agendas, unpacks how resilience agendas reconfigure relationships between people and governments in times of crisis and elaborates on the ramifications for public emergency governance if belief in resilience as non-state responsibility proliferates in the future.

COVID-19 response – lessons learned: challenging the neoliberal TINA discourse through social work education

ABSTRACT Social work academic literature has consistently documented the detrimental effects of the neoliberal phase of capitalism on society and has issued calls against it. This paper supports and furthers these claims. It is informed by a critical pedagogy and Gramscian lens and argues that the COVID-19 public health emergency context provides some lessons which can be used to discredit the ‘There is No Alternative’ (TINA) neoliberal discourse. More specifically, it argues that the pandemic offers an updated critique of the TINA discourse, as it revealed that there is an alternative to public spending cuts, that market-based solutions are irrelevant for the well-being of society, and that the social value of life-sustaining activities such as caring, is important for the social reproduction of society. This paper is a call for action to all social work educators who espouse the progressive values of our profession, to utilize these lessons learned and challenge neoliberalism. Relevant examples towards this aim are offered.

Left cultural populism and podemos: is it possible to newly orient cultural policy in Spain?

ABSTRACT Three main factors spurred a re-think of Spain's cultural policy: (1) cuts in public spending on culture: (2) the 2008 global financial crisis and its impact on cultural funding; (3) the institutional crisis and the popular unrest that found expression in the 15-M. These factors created an opportunity for rethinking cultural policy. This paper examines two contemporary proposals for newly orienting cultural policy. One is based on the idea of cultural “commons” free of the State and market forces. The other has been drawn up by the Podemos political party, and seeks to break the cultural mould cast by successive post-dictatorship social-democratic and conservative governments and is based upon cultural dissemination. This paper thus: (1) analyses the discourse on cultural policy in Spain by left-wing populism; (2) assesses to what extent this political current came up with an alternative to earlier policy paradigms; (3) discusses the soundness of commons-based proposals.

Fiscal Incentives for Economic Development in the World under the Condition of the COVID-19

The article describes the fiscal stimulus, which used in the world to overcome the negative effects of the recession in the context of the COVID-19 pandemic. The authors used historical and static methods, a combination of methods of analysis and synthesis, etc. Based on the statist analysis of the dynamics of macroeconomic indicators, the authors confirmed that the main development trend of most countries and Ukraine in 2020 is a significant economic decline (falling production, rising public debt, growing fiscal deficit, etc.) caused by the COVID-19 pandemic. The article summarizes that in the recession in 2020, countries use measures to fiscally stimulate households and business units through additional government expenditures and lost budget revenues. The size and structure of fiscal stimulus measures vary among different groups of countries. The main fiscal stimulus during this period are: deferrals and reductions in taxes, a moratorium on the payment of certain types of obligations, various forms of cash surcharges and subsidies, partial unemployment, capital injections into enterprises, loans and guarantees. The debt burden is a significant threat to low-income countries, as debt restructuring and public spending cuts will be relevant in the long run to stabilize debt in such countries. This means limited use of fiscal stimulus to exit the recession and stimulate economic development in the country. The results can have practical application within the framework of the formation of the state fiscal policy to overcome the recession and stimulate economic development in the country. In Ukrainian practice, during the pandemic, the main measures of fiscal stimulus were the use of reduced working day schemes and the expansion of unemployment benefits; changes in taxation; financial support for retirees; subsidies; social and economic support of households and enterprises. JEL classіfіcatіon: H2, H5, H6

Beyond the austerity-driven hypothesis: Political economic theses on penality and the recent prison population decline

In what might be called the ‘austerity-driven hypothesis’, a consistent strand of literature has sought to explain the prison downsizing witnessed in many jurisdictions of the global north over the past decade by referring to the financial crisis of the late 2000s to early 2010s and its effects in terms of public spending cuts. Since this economic phase is essentially over, whereas the (moderate) decarceration turn is still ongoing, there are good reasons to challenge this hypothesis. This article delves into the non-economic forces that are fostering a prison population decline that, 10 years on, is becoming the new ‘penal normal’. The article thereby aims to spark a dialogue not only with the scholarship exploring the prison downsizing but also with certain theoretical frameworks that have played a key role in examining the punitive turn era. Additionally, the article contributes to the conversation on the need to reframe materialist readings on penality in a ‘non-reductionist’ fashion. By revisiting heterodox theses and scrutinizing the impact of recent penal changes on traditional materialist accounts, the article joins the collective endeavour seeking to update political economic perspectives on punishment and the penal field.

The Legacy of Austerity

In considering the impact of austerity, much attention has been focused on the immediate effects of public spending cuts and on documenting the resulting increase in hardship and unmet needs. However, in calculating the consequences of austerity for the welfare state, it is its enduring legacy that is equally important. This article examines the proposition that the indirect effects of austerity on social, economic and political relations are as significant for the welfare of future generations as the ‘decade of austerity’ has been for contemporary welfare. The analysis draws on the approach adopted by Paul Wilding (1992) reflecting on the 1980s as the ‘decade of Thatcherism’. Wilding’s ten legacies are recategorised across four dimensions: normalising a non-commitment to welfare, societal scarring, refuelling the race to the bottom and diminishing the political capacity for change. The conclusions suggest that austerity will abide in the social and political relations of welfare long after austerity measures have ceased.

Fiscal Consolidation Programs and Income Inequality

Following the Great Recession, many European countries implemented fiscal consolidation policies aimed at reducing government debt. Using three independent data sources and three different empirical approaches, we document a strong positive relationship between higher income inequality and stronger recessive impacts of fiscal consolidation programs across time and place. To explain this finding, we develop a life-cycle, overlapping generations economy with uninsurable labor market risk. We calibrate our model to match key characteristics of a number of European economies, including the distribution of wages and wealth, social security, taxes and debt, and study the effects of fiscal consolidation programs. We find that higher income risk induces precautionary savings behavior, which decreases the proportion of credit-constrained agents in the economy. Credit-constrained agents have less elastic labor supply responses to fiscal consolidation achieved through either tax hikes or public spending cuts, and this explains the relationship between income inequality and the impact of fiscal consolidation programs. Combining micro- and macro data, we find evidence of the mechanism.

The impact of population size on the risk of local government default

Since the outbreak of the international economic crisis in 2008, governments’ fiscal policies have been strongly influenced by high levels of public debt and default. Studies of the causes of debt problems for large local governments have emphasised the interest and timeliness of identifying factors that may influence the probability of municipal default, and have concluded that fiscal policies should be defined according to population size. The present empirical study was conducted on a sample of 1476 local governments, with data for the period 2009–2014, to determine the influence of financial, socioeconomic and population factors on default risk in small, medium-sized and large municipalities. The results obtained show that the factors that influence the risk of default vary according to the size of the municipality, although some are common to all or most cases, such as real estate taxes, vehicle taxes, financial autonomy and per capita income. The main elements found to vary according to municipal size are overall immigration, female immigration, female unemployment and proximity to the next elections. Our findings show that the financial risk of local governments is affected not only by population size but also by financial and socioeconomic variables. These results can help policymakers to design fiscal policies appropriate for the size of each municipality, thus contributing to avoiding bankruptcy, cuts in public spending and tax increases. Our study findings may be of interest to politicians, managers, fiscal authorities, central governments, supervisory bodies, financial institutions, banks, voters, taxpayers and users of public services.

Shifting sands: The reconfiguration of neoliberal youth penality

This article begins by tracing the emergence of ‘therapeutic surveillance’ as a new formula for neoliberal disciplinary power. It maps and interrogates the reconfiguration of a hybrid array of neoliberal rationalities and technologies for the penal governance of young people who offend. It then engages with the challenges posed by critical realists to the governmentality position by questioning how human agency can contest, subvert and resist the dystopian reach of ‘therapeutic surveillance’ in action. While ‘therapeutic surveillance’ is steeped in a disciplinary logic of individualization and responsibilization, we argue that it also opens the space for a more transformative youth penality to be articulated; one which challenges the constraints of structural disadvantage in the pursuit of social justice. The article concludes by arguing that newly emerging youth justice configurations which have appeared in response to dramatic cuts in public spending offer a plausible or transformative challenge to the regulatory logic of neoliberal youth penality.

Forecast in detail

Government borrowing in 2018–19 fell to a 17‐year low. But extra public spending and tax cuts announced since last October mean that 2019–20 is set to deliver the first year‐on‐year rise in the deficit since 2012–13. And a change in how student loans are classified and likely ‘giveaways’ under a new Prime Minister are set to push up the deficit further compared to recent forecasts.

Mixed Loyalties. The Middle Class, Support for Public Spending and Government Efficacy in Times of Welfare Retrenchment

Recent studies assume that the middle class’s commitment to the welfare state has gradually eroded through the implementation of neoliberal policies. This article takes a more nuanced view by addressing the increasing heterogeneity within the middle class. It first shows that large segments of the middle class hold composite attitudes toward public spending. Small business owners combine moderate support for social spending with strong support for spending cuts. Likewise, technicians combine average support for social spending with average support for spending cuts. They differ from socio-cultural professionals who strongly support social spending and at the same time strongly oppose cuts in public spending. Results also indicate that support for spending cuts decreases in countries where public spending is deemed efficient, most notably among socio-cultural and technical professionals. Thus, it is argued that the middle class’s mixed loyalties can best be interpreted as evidence of a demand for government efficacy rather than as a sign of increasing conservatism.

Feeling Austere

Feeling Austere

'Brexit is Sexist': No-Deal Fact Checker

Although the EU has been influential in the development of equalities legislation, Brexit would be unlikely to put these rights in jeopardy. Historically, the UK has led the way when it comes to women’s rights and workplace and family protections, and this will surely continue. The worry that undermining women’s rights is part of a secret Brexit agenda is verging on the paranoid. What’s more, even if a future UK government did want to ‘turn back the clock’, it would require the support of parliament and, ultimately, those responsible have to answer to the public at the polls. It is very unlikely that any future administration would be able to roll back women’s rights in the ways feared. Likewise, claims of a link between Brexit, austerity and women simply do not stand up to scrutiny. The argument that public spending cuts are “sexist” is already inherently questionable – but to claim the same will be true of Brexit depends on absolute worst-case scenarios, flawed logic, and an assumption that recession-level spending cuts would automatically follow our departure from the EU. Take these assumptions away and there is very little left at all.

Inequalities in mental health and well-being in a time of austerity: Follow-up findings from the Stockton-on-Tees cohort study

In response to the 2007/8 financial crisis and the subsequent ‘Great Recession’, the UK government pursued a policy of austerity, characterised by public spending cuts and reductions in working-age welfare benefits. This paper reports on a case study of the effects of this policy on local inequalities in mental health and wellbeing in the local authority of Stockton-on-Tees in the North East of England, an area with very high spatial and socio-economic inequalities. Follow-up findings from a prospective cohort study of the gap in mental health and wellbeing between the most and least deprived neighbourhoods of Stockton-on-Tees is presented. It is the first quantitative study to use primary data to intensively and longitudinally explore local inequalities in mental health and wellbeing during austerity and it also examines any changes in the underpinning social and behavioural determinants of health. Using a stratified random sampling technique, the data was analysed using linear mixed effects model (LMM) that explored any changes in the gap in mental health and wellbeing between people from the most and least deprived areas, alongside any changes in the material, psychosocial and behavioural determinants. The main findings are that the significant gap in mental health between the two areas remained constant over the 18-month study period, whilst there were no changes in the underlying determinants. These results may reflect our relatively short follow-up period or the fact that the cohort sample were older than the general population and pensioners in the UK have largely been protected from austerity. The study therefore potentially provides further empirical evidence to support assertions that social safety nets matter - particularly in times of economic upheaval.