European politics is dominated by the implications of the recent economic crisis. The global financial crisis, which started in 2007, induced an economic recession throughout Europe, followed by a sovereign debt crisis in several European states. The political response to the economic crisis by most governments in the European Union (EU) focused on austerity, attempts to bring down budget deficits and control the rise of debt. The papers presented in this panel investigate from a comparative political economy perspective (i.e. research that combines tools and theories from economics and political science), what factors explain variation in fiscal austerity policies in Europe, with particular attention to the consolidation episodes adopted by several governments in the European Union during the present decade? And, what are some of the consequences of those policies? Through a variety of qualitative and quantitative method approaches, the papers in this panel study the role played by institutions, party systems, interest groups and electoral competition dynamics in shaping austerity policies, and how some of these factors interact with social and economic variables. The panellists also investigate what is the impact of these policies on party systems and on financial markets reactions.