European corporate financial distress reaches four-year high
New data from Alvarez & Marsal indicates that financial stress across European markets has widened, driven by earnings weakness and inflationary pressures.
A new report from professional services firm Alvarez & Marsal (A&M) reveals that financial distress among European companies hit a four-year peak in 2025. The trend is largely attributed to systemic earnings weakness, affecting 10 out of the 12 sectors analyzed by the firm.
The findings suggest that distress is no longer confined to isolated pockets but has permeated almost all nine markets covered in the study. While the analysis captures data prior to the most recent supply chain and energy price volatility resulting from the conflict in Iran, experts anticipate that these external factors will exert further pressure on corporate bottom lines over the next 18 to 24 months.
Macroeconomic headwinds are further complicating the recovery outlook. The European Central Bank has initiated interest rate hikes to combat rising inflation, while reduced consumer confidence suggests significant challenges ahead. Businesses face an environment marked by potential declines in sales volume and further erosion of margins.