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Austerity is a concept widely used in the economic field when referring to the application of an economic policy based on reducing public spending and increasing taxes.
The basic scheme of economic austerity lies in the greatest possible reduction in public spending and the increase in fiscal pressure on citizens and companies in a given country.
In other words, increase the level of public collection and minimize spending by the State in order to achieve the lowest possible public deficit.
Due to an economic recession and the response of different governments to the crisis, this concept acquires special relevance, especially when describing the new economic policies that are intended to be applied.
Positive aspects of economic austerity
It is common for a government threatened by a situation of near default on its debt commitments to act by activating restrictive political and economic measures.
In this way, austerity allows states to face extreme situations, helping to improve national accounts and to avoid, in a way, bankruptcy or bankruptcy.
Also an increase in the level of taxes causes a higher level of collection that, added to the decrease in the level of spending on public matters, can reduce a deficit considerably or even lead to the appearance of a public surplus.
Negative aspects of economic austerity
Although the austerity measures undertaken around the world in recent years were born with the aim of economic improvement, not all of these practices have had such results.
On the other hand, the appearance of the so-called spending cuts has always been widely criticized since in many cases they have had an effect on important bases of the public economy, such as health, education or infrastructure.
In other words, although these measures usually translate into better health for the public accounts and the economy of a country, they usually lead to a decrease in well-being for citizens.
Austerity at other levels
Alternatively, the concept of austerity is equally applicable to the more domestic economy, taking into account the household management of their resources or in their family economic planning.
This is done using the same formula of reducing spending and increasing the income level if possible.