European Corporates Going Steady in Mid-Year Review: Stable Outlook Supported by a Strengthening Macroeconomic Backdrop

We have a primarily stable outlook across our European corporate ratings sector coverage for the remainder of 2024 and into 2025. In this commentary, we summarize and explore the key themes across our sector outlooks.

-- Although considerable uncertainties around the evolution of the macroeconomic backdrop remain, we anticipate European corporate issuers to benefit from a gradual economic strengthening across the Euro Area as well as the UK.
-- We note, however, that the current macroeconomic environment, considering only gradually declining interest rates and some persistence in inflationary pressures, continues to pose notable near-term challenges.
-- That said, absent unforeseen geopolitical or macroeconomic event risks, these challenges are already largely incorporated into our current corporate credit ratings and/or are mostly balanced by considerable mitigants both on an individual issuer and sector-specific level.

"Unforeseen geopolitical and/or macroeconomic event risks remain the biggest threat to our sector outlooks, issuers' credit risk profiles and ultimately issuer's credit ratings," said Moritz Steinbauer, Senior Vice President and Sector Lead, Corporate Ratings, Diversified Industries. "This is particularly true for any events that stall disinflationary trends, such as events related to energy prices and/or the cost of food, which could consequently prompt monetary policies to remain restrictive for longer."