In much of the world, economic policy is becoming tighter

INFLATION, IT ISG often said, is a matter of too much money chasing too few goods. In many places that has been 2021 in a nutshell. Resurgent demand collided with insufficient supply, yielding inflation of 3% in the euro area, more than 4% in America and over 9% in Brazil. Such price pressures, together with early signs that economies would take off as lockdowns ended and more people were jabbed, led policymakers to set the course for scaling back emergency stimulus. In many places fiscal support is being withdrawn and central banks are either tightening policy or considering doing so. But fortunes can change quickly in the pandemic. As the Delta variant of the coronavirus spreads, the risk now is that policy normalises just as economic growth loses momentum.Governments are pulling away the generous support they provided earlier in the pandemic. A turn towards austerity is not on the cards; indeed, in the European Union spending out of the €750bn ($886bn) recovery fund agreed in 2020 is only now beginning. Yet fiscal policy is becoming much less accommodative. Across the 20 group of economies, fiscal deficits, net of interest payments and adjusted for business-cycle conditions, are expected to shrink in half next year compared with 2021 (see chart, top panel).