Populist pressure could spawn stagflation

Washington

IT'S practically become conventional wisdom among the economic pundit class that central bankers have been playing far too big a role in managing the global economy. If only other policymakers came off the sidelines and joined in from the fiscal side, all would be right with the world.

Well, maybe not. Following Britain's vote to leave the European Union, the odds are growing that governments will be jolted into action by mounting populist pressures worldwide. The danger, though, is that the steps they take end up being inimical to growth - think protectionism and severe curbs on immigration - rather than supportive of it.

The danger, as countries turn inwards and inefficiencies proliferate, could be a return to the bad old days of the 1970s and early 1980s, when economies suffered from a toxic mix …