CRIF European Credit Outlook 2026

The CRIF European Credit Outlook provides a comprehensive assessment of the credit risk profile of c. 48,000 limited liabilities non-financial corporates across the EU-27 with more than EUR 50m of revenues, combining historical dynamics over the 2022-2024 period with forward looking views. Overall, the analysis indicates a still resilient, albeit expected gradually weakening, credit environment, negatively affected by tightening macroeconomic conditions and elevated geopolitical uncertainty.

Credit Quality Remained Stable Despite Multiple Shocks

In the 2022-2024 period, corporate credit quality across the EU-27 remained broadly stable at satisfactory levels, as assessed through a proprietary CRIF scoring model (“CRIF EU Score”) designed to evaluate European corporates under a standardized approach that ensures full cross-country comparability. According to the model outcome, c. 52% of firms, on average over the 2022–2024 period, were positioned in the “Safe Area”, 35% in the “Intermediate Area” and 13% in the “Vulnerable Area”.
This reflects the ability of corporates to absorb a series of external shocks, initially shaped by the aftermath of the Covid-19 pandemic, and subsequently by the impact of the war in Ukraine, which contributed to rising inflationary pressures, supply chain disruptions, increasing interest rates. Despite the adverse environment, Euro area corporates have benefited from the continued support of financial institutions, with the stock of outstanding loans increasing by c. 4.3% between December 2021 and December 2024, underpinning corporate liquidity which represented a key mitigating factor against the adverse effects stemming from the aforementioned macroeconomic conditions. Loan stock levels continued to grow throughout 2025 (c.+2.4% from December 2024 to December 2025) and in the first months of 2026 (c. + 1.7% from December 2025 to April 2026) despite the more challenging environment.

Sector Risk Profiles Remained Uneven

At a sectoral level, credit risk differentials remained material. Construction & Real Estate displayed the worst risk profile in 2024, with 44% of firms in the “Safe Area” (51% for EU-27) and 18% in “Vulnerable Area” (13% for EU-27). This reflects a combination of complexity and execution uncertainty associated with construction activities and exposure to cyclical demand dynamics. Construction companies are strongly exposed to potential cost overruns, delays, and operational interruption, negatively affecting the trade working capital management and limiting the visibility on expected cash flows. Conversely, Agriculture, Food and Beverage showed the most conservative credit risk profile even though the sector is exposed to multiple risk factors, including price volatility, supply chain disruptions, seasonal production patterns and weather-related shocks.

Pressure on Profitability Became More Visible

Focusing on economic and financial performance over the 2023–2024 period, two relevant outcomes emerge. While European corporates continued to display robust liquidity profile and debt sustainability metrics, revenue growth lowered (+3.9% in 2024) coupled with an EBIT trend under pressure (-1% in 2024), especially in some sectors such as Manufacturing (-5.2% in 2024) and Commerce (-2.1% in 2024). Manufacturing performance reflected an increasingly challenging operating environment characterized by intensifying competitive pressures, particularly from the continued expansion of Asian players, alongside subdued demand and supply chain constraints. These pressures are more evident at the profitability level, where EBIT was negatively affected by the weakness of key segments, such as Automotive, as well as increasing cost pressure on key inputs. The limited revenues growth recorded by European corporates in 2024 was consistent with the EU-27 Gross Domestic Product (“GDP”) increase by around 1%, underscoring structural fragilities which negatively affected, and continue to affect, the competitiveness of European players in international markets and the state of domestic demand.

Geopolitical Risk Is Increasingly Influencing Credit Risk

The environment in which European corporates have recently operated, and continue to operate, is characterized by a growing prominence of geopolitical risks, whose potential effects are becoming a key driver of credit risk evolutions. The ongoing tensions in the Middle East are putting pressure on both energy and production input costs, as well as on supply chain reliability, thereby contributing to an expected growth of the inflation rate in 2026. The duration of the disruption of the Strait of Hormuz will represent a key driver of inflation and GDP trends across European countries, influencing the European Central Bank’s monetary policy. Recent diplomatic progress between the United States and Iran has contributed to a partial easing of regional tensions. However, unresolved issues related to Iran’s nuclear program, sanctions, and broader security dynamics, including tensions involving Israel and the Strait of Hormuz, continue to limit visibility on the sustainability of the current de-escalation. Moreover, even under a scenario of gradual de-escalation, the effects of first-half developments will continue to weigh on macroeconomic fundamentals and global trade dynamics, suggesting an overall environment that remains exposed to persistent vulnerabilities.

Default Rates Are Expected to Increase

The baseline scenario for 2026 foresees an increase in 1-year public default rates for European corporates, reaching 0.48% (from c. 0.4% in 2024 and 2025 according to last estimates data), under a modest EU-27 GDP growth of 1%, a moderate rise in inflation to around 3%, and a slight increase in interest rates. According to this scenario, a gradual de-escalation of the US-Iran conflict is expected in the second half of 2026 coupled with moderately tighter credit conditions. In an adverse scenario, assuming a new escalation of the conflict in the Middle East and prolonged disruptions in the Strait of Hormuz, EU-27 GDP growth is expected to  remain close to zero whilst inflation rate is forecasted around 5% and interest rates increasing to c. 3.5%. This would translate into more selective credit conditions, negatively affecting the financial flexibility of European corporates, especially the most fragile ones. Considering this, default rates are expected to increase more markedly, potentially approaching 0.58% by the end of 2026.
With reference to 2027, default rates are expected to increase further, with a more marked deterioration under the adverse scenario. In particular, the EU-27 default rate is foreseen at 0.55% under the baseline scenario and 0.71% under the adverse scenario. The 2027 forecasts will be strongly influenced by the evolution of the macroeconomic and geopolitical environment throughout 2026.
By sector, Construction & Real Estate are expected to remain the most vulnerable industry in terms of default rates, both on a historical (0.64% in 2024) and forward looking basis (0.75% under baseline scenario and 0.82% under adverse scenario in 2026). At the same time, according to CRIF’s view, the most exposed sectors to the current macroeconomic and geopolitical environment are expected to be Manufacturing and Commerce. Manufacturing default rates (0.38% in 2024) are foreseen to increase to 0.48% and 0.62% in 2026 under, respectively, the baseline and the adverse scenario, while Commerce default rates (0.29% in 2024) are forecasted to grow in 2026 to 0.39% (baseline scenario) and 0.51% (adverse scenario). These sectors could suffer due to their high exposure to international markets both as end-markets and in terms of supply chain dependencies, as well as their sensitivity to potential inflationary pressures, which would directly impact on consumers’ purchasing power.
The default rates’ expectations consider also a high Public Debt to GDP ratio in EU-27 which may limit European governments’ ability to deploy large scale support measures, comparable to those implemented during the Covid-19 crisis, to respond to adverse shocks without undermining debt sustainability. In addition, financial institutions support will remain a critical and necessary factor in navigating the current operating environment and managing potential downside risks or further stress escalation.