Allianz SE warned in a report this month that 9 million of those people face an elevated risk of becoming unemployed in 2021 because of the fiscal policy cliff. In the U.K., a survey of employers estimates a quarter of furloughed workers could lose their jobs when the government begins reducing its subsidy.

The Bank of England has warned many benefit recipients may become permanent casualties of the crisis. Former Governor Mervyn King said last week that the U.K. program shouldn’t end too early, but be maintained “right up until the point we see GDP very close to where it was before Covid-19.”

Across Europe, many economies will suffer double-digit slumps in output in 2020. The big hit will be this quarter, the peak of lockdown restrictions. That’s almost certain to be followed by a steep rebound, but rocketing GDP numbers don’t necessarily translate into a sustainable recovery.

Eduardo Zamacola, head of Spain’s textile association, knows that early signs can be deceiving. After once-confined Spaniards started to shop and travel following the end of curbs on public life, stores enjoyed a burst of activity -- which he fears could quickly fizzle out as concerns about the future weigh on confidence.

“This is going to be a very difficult long-distance race,” he said.

Europe Support

To help economies back on their feet, some countries are betting traditional fiscal stimulus can spark a rebound. Germany is rolling out a 130 billion-euro ($147 billion) spending package after earlier unleashing more than 1.2 trillion euros to stabilize its economy, Europe’s largest.

Chancellor Angela Merkel’s government has vowed to spend whatever it takes to get the country growing again, including extending its renowned Kurzarbeit wage-support program. After years of German budget surpluses that’s been welcomed by other nations, but the country is a rare exception in Europe. Most of its peers face stressed finances.

That puts pressure on European institutions to deflect the pressure. The European Central Bank is keeping investor concerns about ballooning national debt at bay with huge bond-buying in the euro zone, and the European Union plans to back that up with a 750 billion-euro fiscal package.

Such support gives countries the scope to dig even deeper. Italy has extended furlough programs to 18 weeks from 14 weeks, which will protect some workers until the end of the summer. Prime Minister Giuseppe Conte’s government is also planning to stretch its finances with another 10 billion euros in stimulus, even though the nation’s debt ratio looks set to top 150% of GDP this year. Finance Minister Roberto Gualtieri said at a parliamentary hearing on Wednesday that the government will further push back tax deadlines to help companies.