The global economy was already in trouble before COVID-19 struck, with trade conflict between the US and China, over-inflated stock markets and anaemic growth throughout the Eurozone dependent on the life-support of negative interest rates and quantitative easing. Trump´s transactional approach to foreign affairs was making the US an unreliable ally as European countries became increasingly concerned about the implications of China´s rise. Tensions were rising in the European Union over the post-Brexit budget. Digital technologies were invading the work place. Central bank policies, driving up asset prices but not feeding into the real economy, were increasing inequality within and between countries.

COVID-19 has impacted on all of these tendencies. The confrontation between the US and China deepens, even as the US turns more inward. Trump blames China for the virus in an attempt to save his election. Chinese “wolf warrior” diplomats hit back. The tensions within the EU are reaching an existential level as North and South clash over how to fund economic reconstruction, while the global economy crashes into recession. The virus itself strikes disproportionately at the poor and ethnic minorities, while the trillions of dollars that central banks are pumping into the economy disproportionately benefit the wealthy. Inequality, like the virus, grows exponentially.

As we stumble uncertainly towards what a new normal might look like we have to decide if we are going to let this inequality grow to unsustainable levels, or are we going to take conscious decisions to contain it. Another tendency the virus has accelerated risks making it even worse. Most white collar workers in western countries have been working from home. While many yearn for renewed human contact with fellow workers in the office, or even just to escape from their families, companies have discovered advantages in home working. It reduces the need for office space, and the elimination of the commute to work increases worker efficiency (especially once schools re-open). Home working has forced companies to be more imaginative in their uses of technology, especially in terms of video conferencing and online meetings. The virus has up-ended the inertia that prevented companies from a greater use of technology. The new normal may drive companies further down the path to digitalisation.

Describing the new normal is still hard. It remains unclear how different the world will be. Previous pandemics in the last hundred years have had only limited impact on the structure and functioning of societies. But some speculation is reasonable. Economic recovery is likely to be slower than governments hope. Competition between companies will be tough, as they struggle to cut costs and reduce debt. Governments will maintain restrictions on travel and free movement of people. International air travel will be limited, both by fear of infection and the disappearance of low cost airlines whose cheap tickets no longer cover their costs. Workers will be reluctant to return to public transport which forces them into close proximity with their fellow citizens. All these factors will encourage companies to make more, and more imaginative, use of new technologies. Digital technologies will be reinforced by artificial intelligence.

Home working has already shown many companies that they do not need all their office staff; that many are dispensable without any noticeable impact on the functioning of the company. The digitalisation and automation of the office space will allow them to shed many more. The cost-cutting pressures resulting from competition and high debt levels will force them to do so. In the 1970s and 1980s western countries decimated the traditional working class through a combination of technology and off-shoring. In the 2020s it may be the turn of the new middle class.

On 8 May the US government announced the worst unemployment figures on record. The Dow Jones stock market index rose over 400 points. This not only shows the total disconnect between financial markets and the real economy. It also shows how the trillions of dollars or euros that central banks are pumping into the economy are serving to support large corporations and maintain financial markets. They are not feeding through to the real economy. This perverse effect of monetary policy combines with the downward pressure digitalisation and automation exert on jobs to increase inequality. The COVID-19 outbreak risks driving economic and social inequality to unsustainable levels.