Voting against spending cuts: the electoral costs of fiscal adjustments in Europe

Abstract:

This article analyses the electoral consequences of fiscal adjustments for the governments that implement them. Using profit analysis on a panel of 15 EU member states between 1960 and 2000, this article tests whether an improving budgetary situation has any effect on the probability of prime minister re-election. Contrary to what previous influential studies concluded, results from this article confirm that governments are held accountable for their fiscal policy decisions. In Europe, the probability of the prime minister's re-election decreases when fiscal adjustments have taken place, especially if these consolidations relied on spending cuts. Nevertheless, the strong electoral costs associated with expenditure-based adjustments weakened during the post-Maastricht years. The reason for this was partly a change in voters' tolerance of fiscal discipline and partly because public opinion put the blame on 'Brussels' for the strongest budget cuts.