Ironically, that graph is taken from an IMF paper[1], which outlines a model for the effect of fiscal tightening on the Debt:GDP ratio, under which said ratio g

Ironically, that graph is taken from an IMF paper[1], which outlines a model for the effect of fiscal tightening on the Debt:GDP ratio, under which said ratio generally (depending on the country's fiscal multiplier) increases in the first year after a fiscal tightening, then declines after year 2 (see figures 2, 3 and 4). In other words, that graph supports the idea that austerity helps reduce debt. 1: http://www.imf.org/external/pubs/ft/wp/2013/wp1367.pdf http://www.imf.org/external/pubs/ft/wp/2013/wp1367.pdf