The British Academy has today, published ‘When the Party's Over: The Politics of Fiscal Squeeze in Perspective’, edited by Christopher Hood, David Heald and Rozana Himaz.
The book examines the politics of ‘fiscal squeeze’ (cutting public spending, raising taxes, or both). Such squeezes have dominated politics in many of the world’s democracies in the recent era of austerity, bailouts and fiscal consolidation. Many of them continue to do so, and fiscal squeeze is likely to recur in the future.
‘When the Party’s Over’ shows that:
- democracies can initiate – and handle - fiscal squeeze: in most cases these squeezes were not prompted solely by external pressure coming from lenders or financial markets, did not prompt major political violence and did not lead to major changes in the way politics worked (for example in leading to government by technocrats or all-party coalitions);
- fiscal squeeze in democracies is often, but not always, a political blame magnet: these fiscal squeezes were by no means a shortcut to electoral defeat for incumbent parties associated with spending cuts or tax increases; and
- fiscal squeeze is not always a high-consequence affair for democracies: in most cases these fiscal squeezes had an impact on party politics in the short or medium term, but led to major constitutional or institutional change only in a few cases.
This comparative analysis also raises intriguing questions as to why democracies rarely seem to resort to revenue-only fiscal squeezes and as to how easily policy-makers wrestling with the next fiscal squeeze can be led to false conclusions about what to do on the basis of apparently successful cases from the past.