The State of Public Finances 2015 provides a record of the strategies pursued by OECD countries to correct, consolidate and stabilise their public finances in the period to 2015, and in particular of how these strategies have evolved over the entire period of the economic and financial crisis from 2007-08 onwards. The report also provides an insight into the future plans for public finances over the coming years. Importantly, the report does not confine itself to the challenges of managing public finances, but encompasses a broad range of related policy themes including: the use of fiscal rules, the strategies adopted in various countries to sustain economic growth during fiscal consolidation, the developing role of independent fiscal institutions, how the role of parliaments and citizens in budgeting has been affected, and the degree to which fiscal consolidation has been accompanied by broader-based budgetary reforms.

Right across the OECD, public policy over the past decade has been dominated by the challenges of steering the public finances through troubled times. The fundamental national debate over resources – how they should be raised, allocated and prioritised – often takes precedence over sector-specific concerns, and most particularly when resources are under pressure and even shrinking.

For most countries in the OECD, 2015 is the seventh or eighth year of dealing with the budgetary consequences of the economic and financial crisis precipitated in 2008. These years have been marked by challenges of fiscal retrenchment on a scale and nature unprecedented in modern times.

This chapter presents the overall state of public finances in OECD countries with a particular focus on trends and policy responses between 2007 and 2014. The chapter presents the headline and underlying fiscal position and presents the various fiscal policy responses to the global economic and financial crisis, as well as the ongoing implications for fiscal policy in light of remaining fiscal challenges and country plans. The chapter includes a discussion of fiscal consolidation strategies, recent developments in fiscal rules, country strategies to protect and promote economic growth, the developing role of independent fiscal institutions and the broader range of related reforms in budgetary governance.