What Happens When the Next Crisis (Pandemic) Comes
Addendum to “Must States Go Into Debt?”
When the next great crisis will come, nobody can say. Of 62 countries that fell into recession in 2008 and 2009, forecasters had predicted it for not a single one as the previous year was ending. What can be said is what we would meet it with. The brakes that worked in 2008 and 2020 are worn.
I. What the last crisis cost
A complete bill for the Covid pandemic does not exist to this day, neither in Germany nor in any other country we found. There are only partial bills, and they measure different things.
The International Monetary Fund recorded the states’ support measures. By September 2021 Germany had decided on direct spending and forgone revenue of 15.3 per cent of its economic output, plus loans, equity and guarantees of 27.8 per cent. In direct spending the United States reached 25.5 per cent, the United Kingdom 19.3, France 9.6 and Sweden 4.2 per cent.
The Federal Ministry of Finance put the federal government’s costs for 2020 to 2022 at 439.7 billion euros. That sum, however, also contains 86 billion euros that were transferred to the Climate and Transformation Fund. For the 60 billion from 2021, the Federal Constitutional Court declared this transfer unconstitutional in 2023. The states are not included. Of the emergency aid for small businesses, 14.1 billion euros paid out in 2020 largely without checks, 1.4 billion has flowed back so far.
The German Economic Institute estimates the loss of economic output for 2020 and 2021 at around 350 billion euros. The Bundestag’s commission of inquiry, which is to examine what went right and what went wrong, is still at work.
II. Why the last crisis was cheap
In 2020 money cost almost nothing. Interest rates were at zero, inflation below the European Central Bank’s target. The ECB could buy government bonds on a large scale without violating its mandate. In 2021 the federal government spent only 1.5 per cent of its tax revenue on interest. The hundreds of billions it borrowed barely burdened the budget at first.
III. What is different today
Today the federal government spends 7.7 per cent of its tax revenue on interest, and 18 per cent is expected for 2030. Global debt reached a record of more than 365 trillion dollars in mid-2026. Yields on government bonds in the United States, France, Japan and the United Kingdom are at their highest in more than a decade. The Bundesbank is making losses and has transferred no profit to the federal government since 2019.
A simple rough calculation shows what this means. A support package the size of 2020, around 15 per cent of economic output, would today be about 650 billion euros. At 3 per cent interest that costs around 20 billion euros a year, permanently. In 2020 the same money cost almost nothing.
The ECB, too, would have less room. A pandemic disrupts supply chains and drives up prices, as 2021 and 2022 showed. If the next crisis meets rising prices, the central bank has to choose: help the states or fight inflation.
And preparedness is weaker than one would expect after the last pandemic. In May 2026 the independent Global Preparedness Monitoring Board found that risk is rising and preparation is not keeping pace. In 2024 the WHO detected almost twice as many health emergency events as in 2015. The WHO Pandemic Agreement has been adopted, but it can only be signed once an annex on sharing pathogen samples is finished; negotiations have been extended to May 2027. The United States has not been a member of the WHO since January 2026. And public trust in vaccines and authorities is lower than in 2020.
IV. Who would pay again
How a crisis will unfold cannot be predicted. How rescues have worked so far can be looked up. Whatever was big enough was rescued, and it was paid for through public debt, that is, through everyone’s taxes. Cheap money drove up the prices of houses and shares and made those who already owned them richer. Tenants, the small self-employed and children in closed schools bore the burden without being asked.
We have described these patterns in “The Bill Nobody Draws Up” and “Interest Is Not the Culprit”. The rules that produced them have not changed since.
V. What follows
A control engineer would say: the feedback loop from the last crisis has not been closed. There is no audited overall bill, the inquiry is not finished, the international agreement is not signed. A system that has not measured the last disturbance responds to the next one roughly as it did to the last, only with smaller reserves.
The least would be three things that can be settled in calm times rather than in panic:
- a complete, public bill of the pandemic’s costs to the federal government, the states and the social insurance funds;
- rules that lay down in advance who receives help under what conditions and what they must give back for it;
- a plan for how a crisis is financed when money is no longer free.
The next crisis will come. Whether it again hits hardest those who have least is decided beforehand.
Further reading: Must States Go Into Debt? · The Bill Nobody Draws Up · Interest Is Not the Culprit · The Cybernetic Economic Model