The public sector appears under siege across the globe. While there are variations across and within nations in how this plays out, the arms of the state that provide the social safety net and protect citizens' well-being are especially at risk. The erosion of the state as an institution can be seen in cuts to social programmes and public sector jobs, underfunded infrastructure, the sale of public assets and other forms of privatization along with the more general weakening of regulatory authority and diversion of resources to the private sector. Although such trends are often interpreted as part of the fallout from the Great Recession, they have been observed across localities and regions for a very long time. In addressing the thematic question of the “shrinking state,” we seek to investigate the extent to which the social contract between government and citizens and the private sector has fractured thereby transforming regions and localities. This paper addresses to what degree, why, and where the public sector is in retreat. We examine at what scale of the state from central to local have changes been most profound and explore what the future holds in terms of resistance to, or acquiescence in, these trends.