The aim of this article is to discuss ways in which we as educators of public managers can help our students deal effectively with the challenges thrown up by the sweeping cuts in public services arising as a consequence of the fiscal crisis brought about by the failure of the banks. While our focus is on the UK, we feel that the issues raised have relevance across Europe. Our argument is that by developing a reflexive pedagogical practice we will enable our students to be proactive (agentic), and in accordance with ethical and professional values, to respond to the dilemmas they face arising out of unprecedented public expenditure cuts. We begin by discussing the overall political context which forms the backdrop to the current crisis in public services and its implications. This is followed by a discussion about the pedagogic debate concerning "reflexivity" and the potential role it has in a public management education strategy. A pedagogy for reflexivity needs to be based in an ontology that believes in the efficacy of open, critical and democratic dialogue, and the facilitation of learning in interactional and relational environments. A range of learning and inquiry processes may hold these characteristics, e.g. collaborative inquiry groups, participatory action research. However, we proceed by describing our experience of enabling senior local government managers to work "reflexively" in learning sets and identify key issues emerging for them as they grapple with the impact of the fiscal crisis. In reflecting on this experience we offer some general insights about the role of "reflexivity" in the education of public managers.