Austerity

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DEFINITION of 'Austerity'

A state of reduced spending and increased frugality in the financial sector. Austerity measures generally refer to the measures taken by governments to reduce expenditures in an attempt to shrink their growing budget deficits.

INVESTOPEDIA EXPLAINS 'Austerity'

Austerity measures are generally unpopular because they tend to lower the quantity and quality of services and benefits provided by the government. Beginning in 2009, several nations were forced to embark on unprecedented austerity measures. These measures were necessitated by budget deficits that soared to record levels because of actions these countries took to stimulate their economies following the massive credit crisis and global recession of 2008.

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