Fiscal cliff

The "fiscal cliff" refers to a situation where, at the same time, government spending cuts and tax increases were scheduled to take effect, which could significantly reduce economic growth and potentially cause a recession. This was set to happen automatically at the end of 2012 due to policies implemented to manage budget deficits. In essence, it was a warning that these combined measures could sharply decrease the amount of money flowing into and out of the government, impacting the broader economy. The term highlights the urgent need for political action to prevent negative economic consequences.