Short-time working and other schemes that have staved-off steep rises in eurozone unemployment could undermine an economic recovery and further strain public finances, the European Central Bank has warned.

State-subsidised programmes for saving jobs had a noticeable effect in slowing the increase in joblessness caused by the Continent’s worst recession since the second world war. But in unusually blunt language the ECB argued that they would prevent the right incentives being formed for an economic rebound.