This paper analyses fiscal stress in local authorities in England and Wales since 1981. Part I identifies the extent of fiscal stress and shows that in many local authorities it has been high. Part II analyses the consequences of fiscal stress for social and economic conditions in local areas. The empirical analysis shows that fiscal stress tends to be more severe in areas which are already deprived. Such areas may therefore be prone toa 'fiscal stress syndrome'in which community deprivation and budgetary stress produce a mutually reinforcing spiral of local decline. The prospects for policies which might alleviate fiscal stress are evaluated.
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