The politics of fiscal policy in Europe since the financial crisis poses an important puzzle to political economy scholarship. Political parties campaigning on and implementing austerity policies were installed and maintained in office despite – or even because of – economic policy choices imposing widespread costs. Canonical theories in political science, and in economics, provide little help in understanding these dynamics. The former stress the difficulties of raising taxes and of reducing spending, while political economists’ concerns over political business cycles assume voters reward outlays and tax cuts at the ballot box.

We argue that this puzzle can be resolved with reference to a high degree of deficit aversion in public opinion, at least in the post-2008 period. We make three empirical arguments. First, evidence from the Eurobarometer shows that voter preferences across Europe have shown a high and consistent aversion to government budget deficits since systematic data collection on the issue began in 2010. Second, this is not a meaningless demand for a “good thing”. People (in eight western European countries) are willing to trade off spending on valued public goods (education) if the consequence of that spending would be worsening budget balance. Finally, we identify important downstream political consequences of preferences over fiscal stance. Panel data from Britain reveal that balanced budget preferences have been highly consequential for vote choice in recent elections.

Taken together, these arguments indicate that preferences over government borrowing are an important element of the political economy in western Europe today. Distinct from preferences over redistributive state intervention, the anti-deficit tendency of public opinion sways electoral outcomes.