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Fiscal Cliff

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Definition – What does Fiscal Cliff mean?

Fiscal cliff is a slang term for a difficult economic situation that requires political action in order to resolve or avoid it. The term fiscal cliff was initially used to refer to the end of 2012 in the United States. At the end of 2012, a combination of expiring tax breaks and legislated spending cuts automatically kick in if the government doesn’t intervene. Going over the fiscal cliff – not extending the tax breaks or increasing the spending level – is seen as potentially dangerous for the U.S. economy.

ForexTerms explains Fiscal Cliff

Since coming into regular use as a term for the U.S. problem, the fiscal cliff label has been applied to situations in many other nations. Greece, Japan, Spain and many other countries face unfavorable economic futures if their current patterns of spending and taxation are not changed by a shift in political will. Since the global economic crises was set off in 2008, the fiscal cliff has become common to political landscapes all over the world.

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