The world is currently facing the most serious health crisis in more than a century. While virtually all countries have been affected by the COVID-19 pandemic, there is some variation in the spread of the virus and the extent to which it has disrupted societies and economies.

In Europe, Italy and Spain have been hit particularly hard. The shock of this pandemic has come at a time when these two countries were recovering from the Financial Crisis of 2007–2008 and the resulting Great Recession. This shock had significant effects on most advanced economies. Yet then, too, Southern Europe’s largest nations suffered more than others because of their vulnerability to financial turbulence and their precarious underlying economic situation. The austerity policies that were introduced to tackle their soaring debts became a central, and contentious, political issue in these two countries and attracted great academic interest.

While much has been written on how central governments responded to increasing financial and economic pressures in the aftermath of the Great Recession, the actions of sub-national authorities have attracted little attention. In our article, Adjusting to Austerity: The Public Spending Responses of Regional Governments to the Budget Constraint in Spain and Italy, we have tried to address this gap in scholarship by analysing yearly spending decisions of regional governments in Italy and Spain between 2003 and 2015. In particular, we assessed how rising budget deficits, which triggered the austerity policies imposed by central governments, affected total and sectoral spending by regional public institutions.

The first, and less surprising, result is that overall regional spending stagnated or even declined after the crisis. We found that this decline was sharper in those regions where public finances had deteriorated more dramatically (i.e. where regional budget deficits were higher). Yet we also found that this association was moderated by partisanship. Regional governments led by centre-left parties tended to adopt a more gradual adjustment to rising deficits, while those led by centre-right ones were more active in implementing immediate spending cuts.

Our sectoral analysis showed that public health spending was less affected by austerity than other spending sectors were. Being a ‘core’ (and universalistic) policy at the regional level, healthcare was more sheltered from deficit reduction plans than more ‘marginal’ (and particularistic) areas, social assistance being a clear example of this latter group. We also found that politics further contributed to mitigating the negative impact of deficits on health spending. Again, centre-left regional governments were keener to protect this sector from cuts than centre-right ones. Qualitative analysis and interviews conducted as a follow-up to the article suggest that, although healthcare was more protected from austerity by the need to guarantee basic standards, centre-right parties were still more inclined to cut health expenditure (to contain deficits) by outsourcing service provision and costs to the private sector. By contrast, centre-left parties tried to maintain a stronger public health system. Spending figures alone only partly revealed this important difference in the governance of health systems.

The implications of these findings are of key relevance in the current COVID-19 crisis. Some regions in Italy and Spain have been on the frontlines in the fight against the virus, and after years of austerity, their health systems have proved vulnerable in the face of this new challenge (although, once again, we can observe a certain degree of cross-regional variation in the effectiveness of public health measures introduced to contain the contagion). This is not completely surprising in light of our analysis. Public healthcare, while less affected than other policy areas by cuts aimed at reducing deficits, has nevertheless stagnated or even declined against a backdrop of rising demographic and social pressures. Our study also disproves the argument that ‘politics does not matter’, often held to be true in particular at the sub-national level, where ‘functional’ imperatives are believed to outweigh the influence of ideology. There is evidence that some regional governments showed greater resistance to implementing austerity than others. Citizens should remember this when holding politicians accountable for what they are experiencing today.

– Davide Vampa, Aston University and Simon Toubeau, University of Nottingham

– The authors’ Journal of Public Policy article is available free of charge until the end of August 2020