For nearly a year, large swaths of Europe’s economy have been in a deep freeze.
Trillions in state-backed subsidies and inexpensive loans have kept businesses alive, while governments pay millions of furloughed workers to stay home. In much of Europe, layoffs or forced bankruptcies are banned.
In pursuing such policies, European leaders have bet that, once the pandemic subsides, they can defrost the region’s $18 trillion economy, allowing businesses to fire up quickly and bring back workers. It’s an intentional effort to slow an economic deep clean, dubbed by many economists creative destruction. This reflects a political choice: Europeans are generally less tolerant of the brutal adjustments required by the U.S. model of capitalism.
But as the pandemic drags on and Europe’s vaccine rollout is expected to stretch through the year and beyond, some policy makers, economists and business executives worry that mothballing the economy for so…