Not since the 1918–1920 Spanish flu pandemic has the world seen a health crisis of similar proportions to Covid-19. As of mid-January 2021, we have recorded 98 million infections, 2.1 million of which ended in death. As shocking as these figures are, we are still a long way off the 500 million cases of Spanish flu, and the 20–30 million fatalities a century ago. 

Not wanting to sound compassionless in the face of such tragedy, it is also worth looking at the economic dimensions of this pandemic. 


We know that contrary to the Spanish flu, it is primarily the old who die of Covid-19. We also know that those who are economically disadvantaged are at the greatest risk of death. Additionally, people with lower educational attainments who work in low-level service jobs, and to work in packed public transport systems, may struggle with social distancing. However, university-educated white-collar staff are more likely to work from home or travel work in their own cars, making social distancing possible in a way that is inconceivable to poorer sections of society. Equally, the measures taken to fight Covid-19 (closure of retail and restaurant sectors) are particularly hitting low-paid non-permanent workers.

But while it is particularly the old that are dying, the young are facing problems of a different sort. With a severe recession and a wave of insolvencies on the horizon, their start into the labour market is going to be even more difficult than it had been for previous generations. Temporary jobs, internship after internship and lower life-earnings will be the tale of those entering the labour market in 2021.

On a macro-level: foreign investment flows in 2020 dropped by 42% below that of the previous year, and with a second wave raging across Europe there is little hope that numbers will pick up soon. Compared to emerging market economies, however, Europe is in a relatively comfortable position. Stimulus packages and quantitative easing soften the blow. Emerging markets, hit by the same problems, are at the same time also facing record capital outflows, leading to liquidity crises.

On the upside, there is the research and development strength of Europe in biotech and pharmaceuticals. BioNTech (together with Pfizer), AstraZeneca (with Oxford University) and Gamaleya have managed to bring vaccines to the market. CuraVac and GSK (with Medicago) are only a step away from doing so. And companies such as Roche or Sanofi are working on Covid-19 treatments. So, there is light at the end of the tunnel. 

Martin Kaspar is head of business development at a German mittelstand company in the automotive industry.

This article first appeared in the February/March print edition of fDi Intelligence. View a digital edition of the magazine here.