Austerity

Austerity

Austerity measures are policies used by governments to reduce deficit in times of economic hardship. These policies are usually either tax increases or spending cuts, or a combination of both. They tend to be implemented after economic crises such as recessions when it is likely a government will not be able to honor its debt repayments. Austerity measures are sometimes used as a condition for an organization or country to lend a government facing financial difficulties bail-out money. For example, the International Monetary Fund (IMF) and the EU made it a requirement for Greece to impose austerity measures before it loaned money to help it recover. If austerity measures are too focused on short-term growth, they can in fact slow economic growth and reduce employment. They can also lead to a decline in the standard of living, which occurred in Greece and led to widespread protests.