Germany’s social contract, its “social market economy” for the past seven decades, has aimed at spreading wealth and providing a broad social safety net for all groups of society. Yet a defining feature of Germany’s new economy has been the sharp increase in inequality.

The lockdowns and stimulus programmes that governments have adopted to fight the COVID-19 pandemic and the associated economic crisis have affected the distribution of income and production within and between countries. Considering both, current evidence indicates that the EU-wide and global...