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The city is a significant level of geography at which to examine the economic, political and social implications of austerity. We consider how the financial crisis originated in the urban and became part of a broader state crisis with consequences for cities. We then explore political implications that include the undermining of democratic processes and the rise of new ‘austerity’ regimes. We also consider implications for key social groups. Arguments are illustrated with evidence from North American and European cities. Finally, we explain how scholars have theorised the situation, which in turn sets the stage for policy and political solutions to the present crisis.