It is a combination of many of these factors and their influence varies over different time horizons. In the near-term, post-Covid consumer demand will depend on confidence in the authorities that it is safe to return to more normal activities. If this doesn't happen, it will exacerbate pressures on firms making it more likely that firms go bankrupt and workers lose jobs at a time when it my be difficult to get jobs in similar industries/roles. This could contribute to hysteresis effects. As the recovery takes longer, and depending on policy actions to support firms and households through this, the effect of indebtedness could become an increasingly important constraint on investment and activity more generally. Such debt problems would likely spill over into the financial sector increasing the likelihood of problems there with the possibility of a damaging credit crunch as a result. Even longer term, the effect of lost human capital will likely have a more lasting effect on the economy.

While the reality will potentially involve, to different degrees, aspects of all of these, the ideal would be a situation in which the economy can grow its way out of the debt. This will raise the amount of tax and lower spending even if the policies remain unchanged and thus lower the deficit. And by raising the denominator, the debt and deficit ratios will look even more favourable. Of course, engineering growth is hard; especially as the economy may be faced with structural changes to how (or even if) certain sector operate. But it would provide the least painful and hopefully most sustainable way out of the increased debt.