Study: Fiscal Consolidation Erodes Government Approval and Raises Crisis Risk (socialeurope.eu)

• 1% GDP consolidation cuts approval by 1.6 points, raises crisis risk by 17.5 points.
• Effects magnified in recessions: approval loss of 2.1 points.
• Spending-only packages more damaging than mixed approaches.
• Based on 17 OECD countries, 1980-2020 data.

"A new study by the Vienna Institute for International Economic Studies (wiiw) finds that fiscal consolidation worth 1% of GDP reduces government approval by about 1.6 percentage points within a year and raises the probability of a major government crisis by 17.5 percentage points. The effects are larger in economic downturns (approval falls 2.1 points). The composition of consolidation matters: spending cuts alone damage popularity more than packages that also include revenue measures."