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Impacts of the Global Financial Crisis on Cities in Europe

An Introduction to Urban Austerity

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The impact of this strategy is felt most in urban regions. It is in the cities, as Jamie Peck (2012: 629) puts it, “where austerity bites.” The immense effects of austerity are most obvious in cities, which are sites of collective consumption dependent on public infrastructures, such as schools, social housing, hospitals, and public transportation. Increasing social polarization can immediately be observed where most of the poor and working class people live (Tonkiss, 2013; Donald et al., 2014; Meegan et al., 2014; Peck, 2014; Vaiou, 2014): “Austerity is especially [urbanized] with cities predominantly on the receiving end of fiscal retrenchment because they remain disproportionately reliant on public services and public employment with large municipal bureaucracies and [organized] workforces with pay and pensions that are targets for reform. They also house the [marginalized] individuals and groups that are the target of austerity-driven welfare reform [programs]” (Meegan et al., 2014: 141).

None of this is new: neither budget deficits nor the hegemonic idea that austerity is an appropriate reaction originated in the financial crisis of 2007–08 (Blyth, 2013; Tabb, 2014; Whitfield, 2014; see also Patti & Polyak, Chapter 9 in this book): “Austerity measures, selectively applied, have long been part of the neoliberal repertoire. Fiscal purges of the state (especially the social state) derive from the most elemental of neoliberal motives-to ‘roll back the frontiers of the state’” (Peck, 2012: 629). However, political support for austerity policies has clearly increased significantly as a result of the European and global crisis. Austerity policies are now the leading principle of public budgetary planning in Europe.

In Germany, for example, the Federal Government and state (or Länder) governments initiated early austerity measures decades before the 2008 financial crisis. These led to job cuts in the municipal sector (Keller, 2014) and a somewhat permanent fiscal crisis on local state level, especially after the early 1990s (Jungfer, 2005; Häußermann, 1991; Eicker-Wolf, 2010; Troost & Schuster, 2010; Müller & Sträter, 2011; Schipper, 2013: 268; see also Thiele, Chapter 7 in this book). However, despite the comparatively favorable economic situation and the fact that the German export-oriented growth model is surviving the current crisis rather well (Belina, 2013a), austerity measures have even increased in recent years. Most importantly, in Germany, austerity has been established as a constitutional principle. In 2009, a measure was introduced under the label “debt brake” (or Schuldenbremse). It will become effective at the Federal level, in 2016, and at the state level in 2020 (Eicker-Wolf & Himpele, 2011; Keller, 2014: 400). Consequences of the “debt brake” can already be observed today. Many German cities suffer from a drastic lack of financial resources. Due to constitutional restrictions and the threat of being subjected to budgetary monitoring by the states, local decision-makers are eager to put high priority on achieving a balanced budget.

However, up until now, there has been little public awareness of the dire costs of austerity policies in cities. Only a few urban scholars have emphasized the negative outcomes of austerity measures and the power structures that sustain them (Jungfer, 2005; Eicker-Wolf, 2010; Troost & Schuster, 2010; Keller, 2014; Klein & Rumpfhuber, 2014; Heinz, 2015). This is slightly different within the English-speaking academic community. While more scholars contribute to the debate on urban austerity (Peck, 2012; Mayer, 2013; Oosterlynck & González, 2013; Tonkiss, 2013; Donald et al., 2014; Meegan et al., 2014; Panayotakis, 2014; Peck, 2014; Tabb, 2014; Eckardt & Sanchez, 2015), the research is also just in an early stage of development.

From our perspective, one of the most important tasks for urban scholars is to fill this gap and shed light on the effects of austerity policies through research. A counter-hegemonic understanding of austerity’s ideological foundations, its urban impacts and the social power relations sustaining it is crucial to successfully combating austerity in Europe and elsewhere. Accordingly, the conference “Urban Austerity: Impacts of the global financial crisis on cities in Europe,” which was sponsored by the Hermann Henselmann Stiftung and the Rosa Luxemburg Foundation, has promoted an interdisciplinary debate that exposed actual urban problems and their spatiotemporal dimensions, discussed regulatory restructuring under a new regime of austerity urbanism, and reflected on the role of urban social movements struggling for progressive alternatives. The decisive questions that guided both the conference and this resulting publication are: How are different urban regions affected by the financial crisis and the resulting austerity strategies? How do cities, urban planning approaches, and urban governance structures change and evolve under the circumstances of crisis and austerity? Which new regulatory restructuring approaches are emerging? What does it actually mean to live in, plan, or design cities under these circumstances? How is the right to housing neglected due to forced evictions and crisis-induced gentrification processes? What is the role of urban social movements in fostering resistance to the depredations of crisis? How do urban governments drive, manage, or subvert austerity policies? An interdisciplinary approach, which includes contributions from urban planners, architects, sociologists, geographers, political scientists, and social movement activists, must answer these questions. Finally, all of these issues must be addressed from a European, international, and transnational perspective.

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