The literature on welfare-state retrenchment generally argues that economics and institutions matter for the retrenchment scale in different countries. This article argues that politics, in the sense of party competition and consensus, also matter. A study of retrenchment in Denmark and the Netherlands from 1982 to 1998 shows a greater extent of retrenchment has been implemented in the Netherlands. This occurred because the Dutch system of party competition with a pivotal center party, the Christian Democratic Appeal, produced party consensus about welfare-state retrenchment. The Dutch labor party had to accept retrenchment to regain government power, and Dutch governments were able to use this consensus to frame retrenchment as an economic necessity. In Denmark, vehement opposition from the Social Democrats made retrenchment a contested issue during the right-wing governments from 1982 to 1993. Following the Social Democrats' return to power in 1993, a party consensus emerged, leading to retrenchment measures.
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