That puts countries such as Italy, Spain and Greece -- all of which have huge tourism sectors -- under the spotlight. Spain’s already bad summer season took a turn for the worse last weekend when the U.K. announced that holidaymakers returning from the country would have to quarantine because of an uptick in coronavirus cases in some regions.

The other major risk is long-term damage to the labor market. Government support programs in Europe prevented unemployment from surging as it has in the U.S., but they may only be delaying rather than preventing devastating layoffs.

With the outlook so uncertain, some expect the ECB to increase its bond-purchase program again before the end of the year to revive growth and bring inflation closer to its target of just under 2%. Data Friday showed euro-zone consumer prices grew 0.4% in July.

Euro-area unemployment is already creeping higher, as companies across the continent respond to weak demand and a dramatically changed global backdrop, particularly for travel and tourism.

Airlines have announced thousands of job cuts, while France’s Airbus SE could eliminate 11% of its global payroll. Its plans to reduce headcount in Spain -- where unemployment is already high -- sparked demonstrations.

High frequency data and surveys show that activity has bounced back from its trough in April and May. The sustainability of that is in question, however, particularly amid growing concern about fresh virus outbreaks.

Germany, where the economy shrank 10% in the second quarter, has already sounded the alarm over rising infection rates.

“We observed a slight recovery in sentiment and certain soft indicators. So we can say in Europe we have the first signs of recovery,” ECB Governing Council member Yannis Stournaras said in a Bloomberg interview this week. “Still, the risks are on the downside.”

--With assistance from William Horobin, Jeannette Neumann, Harumi Ichikura, Kristian Siedenburg and Adeola Eribake.

This article was provided by Bloomberg News.

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