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The world’s top economies took huge steps in recent months to recover from the worst recession in a generation. Now, with coronavirus cases surging again, that progress could be reversed.

What’s happening: Business activity has fallen back into decline in Europe, according to the latest reading of the Purchasing Managers’ Index from IHS Markit, which tracks the manufacturing and services sectors.

Earlier this week, both Spain and France — which are deep into the second wave of the pandemic — surpassed 1 million recorded coronavirus cases.

While manufacturing output powered ahead, Covid-19 fears triggered a fallback in services in France and elsewhere, with fresh restrictions once again slamming hospitality businesses.

Chris Williamson, chief business economist at IHS Markit, said the drop in activity is “far slighter” than what was observed between April and June. But he issued a stark warning on what could be coming down the pike for Europe.

“The eurozone is at increased risk of falling into a double-dip downturn,” Williamson said.

Big picture: Remember all the chatter about a recession that looked like a V or a Nike swoosh? A double-dip scenario looks more like a W, with an interim recovery quickly giving way to a painful retrenchment.

A warning: France’s finance minister said Friday that the country’s economy would likely contract between October and December.

“We’ll probably have a negative growth figure during the last quarter of the year,” Bruno Le Maire told Europe 1 radio, according to Reuters.

The latest PMI reading for the United Kingdom, which is also experiencing a growing crisis as infections mount, showed the weakest growth in activity in four months.

Barclays said Friday it believed the hit to the UK economy in 2020 would be worse than it expected at the end of June. It now expects the country’s output to shrink 10.3%, down from 8.7%.

The rapidly deteriorating situation is putting renewed pressure on policymakers to ramp up relief efforts. On Thursday, UK finance minister Rishi Sunak announced more generous support to protect jobs. The UK government will increase its wage subsidies to help businesses keep staff and also expand available grants.

Central banks, which have already deployed trillions of dollars, could also be called upon to step up to the plate again.

“The prospect of a slide back into recession will exert greater pressure on the [European Central Bank] to add more stimulus and for national governments to help cushion the impact of Covid-19 containment measures, which not only tightened across the region in October but look set to be stepped up further in November,” IHS Markit’s Williamson said.

Across the pond: It’s not just a European problem. US PMI data arrives later this morning, providing a snapshot of the economy as more than two dozen US states report rising Covid-19 cases.

Economists surveyed by Refinitiv expect both manufacturing and services activity to remain roughly flat compared to the previous month — a sign that the US recovery could be running into trouble, too. Check out our recovery dashboard here for the latest readout on your state.

Goldman claws back executive pay after costly settlement

The role Goldman Sachs (GS) played in the looting of Malaysia’s sovereign wealth fund has dogged the bank for years. Now, it has to pay billions to resolve the matter, dealing a black eye to one Wall Street’s most storied players.

The latest: On Thursday, Goldman Sachs’ Malaysian subsidiary pleaded guilty to conspiring to violate US anti-bribery laws through its work with 1Malaysia Development Berhad, or 1MDB.

The company has agreed to pay about $2.9 billion to various authorities. About $1.3 billion of that will go to the US Justice Department — the largest ever penalty under the Foreign Corrupt Practices Act, a US law that bars companies from bribing foreign leaders. Goldman already settled the case with Malaysian authorities this summer.

“Greed is not good,” said William Sweeney, assistant director in charge at the New York FBI office. “Greed like this eventually exacts an immense cost on society.”

The case focused on $4.5 billion that the US Justice Department says was stolen from 1MDB in 2012 and 2013. The money was used to buy New York condos, hotels, yachts and a jet, and to fund movies such as “The Wolf of Wall Street,” according to authorities.

Goldman Sachs arranged three large bond offerings for the 1MDB fund, which raised $6.5 billion and earned the bank about $600 million in fees, according to court documents. Two former Goldman bankers have been accused of helping facilitate the theft of nearly half of the proceeds from those bonds.

This matters: The bank also said it would reduce or claw back $174 million in compensation from top executives, including CEO David Solomon and former boss Lloyd Blankfein. The company’s board said it viewed the matter as an “institutional failure,” and Goldman pledged greater oversight of executives moving forward.

Mattel is surging with kids stuck at home

It pays to be a toymaker as desperate parents try to entertain kids stuck at home.

See here: Mattel (MAT) reported Thursday that net sales jumped 11% last quarter, beating Wall Street’s expectations. High demand for Barbies helped push sales of dolls up 24% compared to the same period last year. Hot Wheels, Uno and Pictionary were also in high demand.

“The toy industry as a whole grew meaningfully and continues to demonstrate its resilience in challenging economic times,” CEO Ynon Kreiz told analysts. “The industry is yet again proving to be a strategic category for retailers as parents continue to prioritize spend on their children.”

Investor insight: Mattel shares, which are down roughly 5% year-to-date, jumped nearly 6% in premarket trading.

The company said it also expects sales to rise during the holiday season, though Kreiz noted that “extraordinary growth in demand” could generate supply chain issues.

“This is not impacted by Covid,” he said. “This is literally all about surge —surge in demand.”

Up next

American Express (AXP) posts earnings before US markets open.

Also today: The latest reading of the US Purchasing Managers’ Index for the services and manufacturing sectors posts at 9:45 a.m. ET.

Coming next week: Ant Financial is expected to price its dual listing in Shanghai and Hong Kong. The initial public offering could be the biggest on record.