Fiscal belt tightening tends to weaken confidence in the private sector, according to a paper published Tuesday by the European Central Bank, although those effects can be mitigated by focusing consolidation on spending rather than taxes.

“Consumer confidence falls around announcements of consolidation measures, an effect driven by revenue-based measures,” according to the paper written by an economist at the ECB and a trio of economists from the University of Amsterdam. “The effects on producer confidence are generally similar, but weaker than for consumer confidence.”