Germany has agreed to extend its furlough scheme for another year to help protect millions more workers from redundancy.
The government has added £9billion to its job retentions budget, which will now end in December 2021.
The scheme protects jobs by allowing firms to reduce employees' hours while keeping them in work. The government then covers the bill on behalf of employers.
Coalition parties have also agreed to continue financial help for small and medium-sized companies, which will now end in December instead of September.
This scheme, known in German as Kurzarbeit, was first introduced in the wake of the financial crisis of 2008-09.
It comes as figures on Tuesday revealed that the German economy contracted by 9.7% between April and June this year.
In the UK, the economy contracted by 20.4% in the second quarter of 2020, compared to the previous three months, though there are no plans for a furlough extension.
Under the scheme, workers get 80% of their salaries paid for by the government - up to £2,500 a month.
However, employer contributions rose to 5% this month, and will rise by 10% every month until its closed for good in October.
Sunak - 'It's not fair'
Chancellor Rishi Sunak has repeatedly insisted that there will be no extension to the coronavirus job retention scheme, which allows firms to put workers on furlough without making them redundant.
He said the support cannot go on "indefinitely".
The initiative that has so far cost £34.7billion and helped almost 10million workers, will start to taper off next month, before ending completely in October.
However, opposition parties are calling for the Government to extend it for the hardest-hit sectors and those plunged into local lockdown, warning the end to the scheme is a "grave mistake".
Sunak warned "there is hardship ahead for many people" as he again ruled out extending the jobs retention scheme.
"It's one of the most difficult decisions I've had to make in this job.
"I don't think it's fair to extend this indefinitely, it's not fair to the people on it. We shouldn't pretend there is in every case a job to go back to."
He declined to extend the measure for sectors unable to return to work, such as the entertainment industry with theatres still shut.
With more than a million jobs lost since the start of the pandemic, Labour leader Sir Keir Starmer has called for a targeted extension to prevent a "jobs crisis on a scale not seen for generations".
The Chancellor has also set out a "plan for jobs" which includes measures to boost apprenticeships, stimulate eating out and a job retention bonus of £1,000 for every furloughed employee retained in January.
