Austerity

In general terms, austerity refers to an extreme form of simplicity. You might say a monk or a nun lives an austere lifestyle. The Kardashians... the opposite.
In finance terms, austerity usually refers to a government which has decided to live like a monk. Or have its country do so. This process typically involves a slashing of expenditures, along with a related cutting of services.
Governments don't turn to austerity on a whim. Usually, the decision has the quality of a drunk going on a two-week bender in Vegas and then checking themselves into rehab. A government might find itself with large deficits and a looming default, perhaps with its creditors pushing it towards an austerity position.
This famously happened to Greece starting in 2009, when the country's debt became so unmanageable that it was forced to cut services and ask for a bailout from its partners in the euro-zone.
Sometimes, the circumstances are less dramatic. For instance, around the same time as the Greek crisis, Britain launched an austerity program of its own. (Only 1 cup of tea at 4pm and half a crumpet.) This was prompted by the economic aftermath of the 2007-2008 financial crisis. No real danger of default existed, but leaders decided to respond to the decline in tax revenue by cutting spending.