Austerity
When a government slashes spending or raises taxes to shrink its budget deficit and debt.
In plain English
When a government slashes spending or raises taxes to shrink its budget deficit and debt.
Austerity is a government tightening its belt: cutting spending, raising taxes or both, usually because its deficit or debt has scared lenders.
It can calm bond markets and steady a currency, but it can also squeeze growth and spark protests. The eurozone crisis of the early 2010s put austerity at the centre of currency markets for years.
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