samdráttinn

Samdráttinn is an Icelandic term that roughly translates to "the contraction" or "the pulling in." It most commonly refers to a period of economic austerity and reduced government spending in Iceland that began in the late 1970s and continued through much of the 1980s. This period was characterized by a deliberate effort by the Icelandic government to curb inflation, reduce the national debt, and stabilize the economy, which had experienced rapid growth and subsequent overheating in the preceding years.

The policies implemented during samdráttinn included cuts to public services, wage restraint, and a general tightening of fiscal and monetary policy. The aim was to bring demand more in line with supply and to create a more sustainable economic environment. This era was a significant turning point in Iceland's post-war economic history, marking a shift away from expansive policies towards a more conservative approach. While it was a challenging period for many, with reduced spending power and slower growth, proponents argue that samdráttinn laid the groundwork for future economic stability and prosperity. The term has since become a historical reference point for understanding Iceland's economic management strategies during that time.