Apart from the credit quality issues which went against the interest of the lenders, the interest of the borrowers were also severely compromised as they were lured into the complex yet alluring deals without being assessed for their repaying capacity based on their prospective income and net worth.
Many euro area governments implemented special working time schemes – such as Germany’s Kurzarbeit programme – as the economic crisis unfolded, in an attempt to prevent a sharp rise in unemployment and to smooth the process of adjustment. But if capacity utilisation remains at low levels, job losses may increase further as the impacts of these schemes fade.