Deficit Game Strategy Guide: How to Win a Season

The arithmetic you have to hit

Start with the numbers, because everything else is a response to them. The hole is €54bn, the deficit is drifting to 5.9% of GDP, and the target is to finish below 3% with the debt ratio falling. That is not one target but two, and they can pull in different directions: the fastest way to cut the deficit is not always the fastest way to stabilise the debt.

The first practical consequence is that you should treat the €54bn as a floor rather than a target. Packages leak. A measure announced in February can be amended in November, a forecast can move in April, and a package that exactly meets the target in January is a package with no margin for the year ahead. Aim to overshoot by a visible amount.

Sequence beats size

Beginners ask which measures are biggest. Strong players ask which measures are available now and expensive later. The catalogue changes in political cost as the year progresses: a measure that costs little goodwill in February can cost a great deal in November, once every interest group has had eight months to organise against it.

This is why the winning pattern on the leaderboard is almost always the same: front-load the measures that are politically cheap and financially real, and postpone the measures that are financially large and politically explosive until you have the capital and the credibility to carry them. Cutting operating costs in February is not glamorous. It is also nearly free, and it buys you room for the decisions that matter later.

There is a tempting strategy in which you hold everything back and negotiate a grand bargain in September. It rarely works, for a simple reason: credibility is built before it is needed, and a minister who has delivered nothing by September is negotiating from weakness with everyone, including allies. The leaderboard rewards early, unglamorous decisions.

Spending restraint versus revenue

The empirical literature on fiscal consolidation, including work published by the IMF and the OECD, tends to find that adjustments built mainly on spending restraint last longer than adjustments built mainly on tax increases. The reason is not ideological: spending measures change the baseline permanently, while many tax increases invite avoidance, litigation and reversal.

In the game, the same logic applies with a twist. Revenue measures are often cheap in political capital and expensive in popularity, while spending measures are the reverse. A package that leans entirely on one side will break on the other indicator, usually around October.

A practical mix for a first serious run is roughly two parts spending to one part revenue, weighted towards loophole closures and levies on narrow bases early, and towards the painful structural measures once you have banked credibility in May.

When to spend political capital

Political capital is the scarcest resource in the game and the one players manage worst. It refills only partially each January, so a season is played with one tank plus a top-up. Spend it in the wrong month and you will be negotiating the amendment session in November with no leverage at all.

Three rules work reliably. First, never spend more than half your capital before the May Commission review, because the review is when you find out whether your arithmetic is credible. Second, spend capital on measures that change the baseline permanently, not on measures that only buy a year. Third, keep a reserve of at least a quarter of the tank for November, when the package is most exposed.

The exception is a popularity emergency. If a collapse in popularity threatens to trigger the prime minister’s warnings, spending capital to stabilise the public story is worth more than any single measure.

Protecting popularity

Popularity is not vanity; it is the clock. Below 15%, the prime minister summons you, and three warnings end the season outright. The trap is that popularity falls with a lag, so the decisions that destroy it often look fine when you make them.

The reliable way to protect it is to pair painful measures with visible fairness. Close a loophole at the same time as you freeze a benefit, and the story becomes “everyone contributes”; do only one, and the story becomes “the wrong people are paying”. In game terms, packages that spread the cost across several groups are met with less resistance than packages that concentrate it, even when the total effort is identical.

Communication matters too. The August press conference and the monthly headlines are opportunities: a minister who explains the plan repeatedly takes less popularity damage than one who announces it once and hopes.

Reading the bond market

The bond yield is the indicator most likely to hand you a bad season for reasons that look unfair. It responds to credibility, not effort. A large package full of measures that markets believe will be reversed can push the yield up, while a smaller, boring, believable package can bring it down.

Watch the yield after every submission, and treat a sharp rise as information rather than noise. If it rises early, you have time to rebuild credibility with a simple, front-loaded package. If it rises in October or November, you are likely to spend the rest of the season paying for it through higher interest and harder auctions.

The practical lesson from the leaderboard is unglamorous: markets reward predictability, and predictability is mostly a matter of announcing less and delivering more.

A worked first six months

This is a template, not a script; the catalogue and the scenario will push you off it. But the shape is sound.

• January — Set a mandate that names one priority, not five. Bank capital; spend nothing yet.
• February — Build a package weighted to operating costs and closed loopholes. Overshoot the target.
• March — Take the hearings seriously. Use the media round to explain the distribution of the effort.
• April — Do not fight the growth forecast unless you have a strong reason. Rebase quietly, do not panic.
• May — Pass the Commission review with a credible path. This is when you earn the right to be trusted.
• June — Negotiate bilaterally with the spending ministers, one at a time, and concede in private rather than in public.

Traps that end seasons

These are the traps that appear most often in submitted runs.

• Spending all your political capital before May. You will have nothing to defend the package with in November.
• Announcing everything in January. It maximises the time your opponents have to organise.
• Ignoring the debt ratio because the deficit looks good. The score does not ignore it, and neither does the market.
• Cutting in a way that concentrates the pain. Concentrated pain organises faster than diffuse pain.
• Treating a rising yield as bad luck. It is usually feedback about credibility, and it is usually early.
• Never revising a plan that is visibly not working. The calendar runs forward; so should you.