This is the biggest week of the year for the financial markets – we're entering into a new economic era

The Federal Reserve will shortly announce an increase in interest rates, and tomorrow the European Central Bank will be meeting to make a decision about ending qualitative easing

There is a lot of stuff to wonder about the nature of the economic cycle, and in particular the timing and depth of the next recession (Getty)

This is, for the financial markets at least, a big week. The Federal Reserve will shortly announce an increase in interest rates – and, writing ahead of the announcement, the thing to look for will be signals as to how many more rate rises we should expect this year. Will it be two, three or four?

Meanwhile the European Central Bank meets tomorrow to decide about the ending of its version of quantitative easing (QE). It has been expanding the eurozone money supply by every month buying bonds off the market. It now holds nearly a quarter of the eurozone countries’ sovereign debt, plus a lot of other stuff too.

Most of the discussion about all this has been about the impact on the economy and on markets. Can the US stand higher rates, and if so, by how much? Can the eurozone continue to grow without the prop of additional money being pumped into it at monthly intervals? These are massively important issues and affect all of us. But there is another way of looking at all this.

This is to stand back and reflect that a period of economic history is over. US interest rates are now back to pre-crisis levels. While this has not happened in Europe or the UK, at least some progress has been made towards normality. QE in the UK is ended, and the even more extreme policies of the ECB are being reconsidered. The post-Lehman crash decade is drawing to a close.

What happens next? Well there is a lot of stuff to wonder about the nature of the economic cycle, and in particular the timing and depth of the next recession. It is a fascinating debate, and for what it is worth my feeling is that some sort of downturn will start in 2020, but it won’t be a particularly serious one. But let’s look beyond that and start thinking about structural issues rather than cyclical ones. If you say, as we can for the US at least, that the emergency is over, what will normality look like? Here are some ideas.

For a start, the unwinding of these extreme central bank policies will reduce some of the distortions they have caused. Take, for example, the boom in asset prices pretty much everywhere. Expect some paring back of asset prices where they appear to have got particularly out of hand. Not necessary a stock market crash, but a reassessment of particularly inflated sectors, including the great US high-tech giants.

The most exposed will be fringe assets, as they always are. Have you seen what has happened to the price of Bitcoin? It is at a seven-month low, down more than 15 per cent in the past four days.

If asset values come back a bit, then wealth inequality will narrow. One of the effects of these central bank policies was to make the wealthy even wealthier. It was not an objective of the banks – they were doing a rescue job – but that is what has happened.

Another aspect of normality is rising real wages. We have not had much of that, at least until recently, but that seems to have changed in the US, and it should start to change here. Europe will be slower, but by the middle 2020s (and once the early 2020s slowdown is past) pay should be rising there too.

Another great structural change, one that will distinguish the 2020s from any previous historical period, will be that the benefits of artificial intelligence will start to feed through into efficiency and hence to living standards.

There has been such a string of scare stories about AI destroying jobs that it is tempting to yawn and think of something else. But there must be something in them, and even aiming off of the hype, it is reasonable to expect that some of the routine jobs will be replaced by computers. If you see this in terms of increased productivity rather than loss of jobs – and note, by the way, that employment growth remains very strong in both the US and UK – then we may have an adjustment problem, but overall there are huge benefits in both quality of services and overall living standards. There is a new McKinsey Global Institute paper on this here.

What about globalisation? It is an obvious issue right now, with the Trump tariffs and so on, but this is not just about the current US administration. There does seem to have been some levelling-off of world physical trade as a percentage of GDP, though trade in services has continued to grow. But it may simply be that trade will change its nature, or to put it another way, globalisation will take a different course. It is hard to do more than flag this up here, but we do know from history that there are no permanent giant corporations, and the present drivers of globalisation will be replaced by others.

The big message here is that the excesses of one period are corrected in the next. The post-crash period is coming to an end, as events this week demonstrate. So now we have to curb the excesses of the past ten years. It should go without saying that the more effectively we do that, the better the prospects for all of us. But we can make a mess of it too.