Almost one in five German companies decided to lay off workers or not to extend fixed-term contracts in April because of the economic impact of the pandemic, in an early indication of how challenging many European companies will find the return to work as lockdowns ease.

Germany’s restaurants, hotels and recruitment companies were particularly badly hit, with more than half cutting jobs, according to a survey of 6,500 businesses by the Ifo economics institute in Munich over the first three weeks of April, which was published on Monday.

The data showed even Europe’s strongest labour market is being shaken by the crisis, suggesting Germany’s attempt to shield workers from the impact of the pandemic with its subsidised short-term leave scheme is unlikely to prevent a sharp rise in unemployment.