Fear the deficit-populism doom loop

You are a finance minister after a decade of meagre economic growth, shocks from a financial crisis, a pandemic and sky-high energy prices.

Your fellow ministers, meanwhile, fret for their careers: populist parties are on the rampage.

The economic context calls for fiscal consolidation; the political one warns against austerity.

What do you do?

Research shows a link between spending cuts and populist success. Indeed, in Britain, France and Germany such parties are already ascendant.

Call it the deficit-populism doom loop: ministers face both big deficits and voter revolts, and

there is little way of satisfying both the bond markets and the barbarians at the gate.

Populists typically promise higher spending on pensions and family benefits, as well as tax cuts—a noxious (farlig) mixture in present circumstances.

The Economist 24 August 2025

Regeringen satsningar på 80 miljarder kr i höstens budget

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