Budget consolidation

Budget consolidation describes the deleveraging of public budgets. The consolidation concept usually consists of a reduction in expenditure (political austerity) and an attempt to increase income.

The aim of any budget consolidation is to eliminate the structural deficit, at least in the medium term. This is the part of the public budget deficit that is not attributable to an economic recession, but to the fact that more has been spent on a long-term basis than has been earned. An overly strict austerity course to consolidate the budget can, however, endanger economic development.

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