Whether fiscal austerity by governments is unpopular or not is much discussed in the literature. One line of research argues that consolidation has negative electoral effects, ranging from declines in politicians’ approval ratings to abstention by voters at elections. Another strand highlights that re-election chances are not harmed by the implementation of austerity and that some voters in fact support consolidation measures. Both sides are limited in at least two regards. First, they do not allow for the possibility that public opinion is shaped by the political discussion about government debts and budget deficits. Second, and relatedly, the literature is limited in its extent to which it considers heterogeneity in preference adaptation across income groups. This article contributes to these debates by bringing to bear insights from the literature on mass preference formation. In particular, I argue that a cross-party consensus on austerity leads voters to align their preferences with the consensus, increasingly demanding cuts to government spending. This adaptation is conditioned by income so that the preferences of those income groups that are the furthest away from the consensus adapt their fiscal preferences most. By including the discursive context of fiscal policy, this article helps explain how austerity can be made popular. Empirically, I test these expectations by matching citizen preferences with party positions on fiscal policy for 60 country years. The empirical results indeed demonstrate that even though low- and middle-income voters are least supportive of austerity, they adapt the most to the party consensus on austerity.

What are the political effects of fiscal consolidations? Theoretical considerations suggest that consolidations should reduce the public’s support for their governments, but empirical studies have found surprisingly small effects on government support. However, most of these studies analyze electoral outcomes, which are separated from the consolidation by a multi-link causal chain. We argue that more direct measures of government support, such as executive approval, show much stronger negative effects of consolidation, since they are less affected by the strategic timing of consolidations or the political alternatives on offer. We analyze a time series cross-sectional dataset of executive approval in 14 Organization for Economic Co-operation and Development (OECD) countries from 1978 to 2014, using the narrative approach to measure fiscal consolidations. We find that spending cuts decrease government approval, especially during economic downturns, but tax increases’ impact on approval remains minimal. Finally, left- and right-wing governments are equally likely to lose approval after implementing austerity.

Restoring sustainable public finances in the aftermath of the Great Recession is a key challenge in most EU countries. In order to learn from history, our paper examines consolidation episodes in the EU since 1970. We shed light on the factors that favour the start of a consolidation episode and determine its success. Compared to the existing literature, we add a number of new dimensions in the analysis. First, we explore a broader set of potential ingredients of the ‘recipe for success‘, including the quality and strength of fiscal governance and the implementation of structural reforms. Secondly, we check whether the ‘recipe for success’ changed over time. Our analysis broadly confirms received wisdom concerning the conditions triggering a consolidation episode and the role of the composition of adjustment for success, with some qualifications related to the role played by government wages. In addition it provides evidence that well-designed fiscal governance as well as structural reforms improve the odds of both starting a consolidation episode and achieving a lasting fiscal correction. We also show that, over time, successful and unsuccessful consolidation episodes have become more similar in terms of adjustment composition.