BCG warns that financial pressure on European companies is intensifying! The room to absorb shocks is becoming increasingly narrow, and transformation pressure is rising in tandem.

Boston Consulting Group (BCG) says one in six companies in Western Europe is under financial pressure as rising leverage makes businesses more vulnerable to shocks. After analyzing around 1,700 European listed companies, BCG noted that across Europe, the proportion of companies needing transformation has risen from 14.3% last year to 16.2%. Among them, Spain and Portugal face the most widespread pressure, with 22% of companies requiring business transformation. France and the German-speaking region, including Germany, Austria and Switzerland, have the highest share of companies facing more severe financial or restructuring pressure, both reaching 10%. The report says the net debt/EBITDA ratioa metric measuring overall leverage levelsrose 22% between 2022 and 2025. By early 2026, nearly one-third of companies had a ratio exceeding 3x, a level BCG considers the threshold for financial pressure. Many borrowing companies that took on large amounts of cheap debt during the pandemic are now struggling to reduce leverage. This makes it harder for them to withstand soaring energy costs, trade disruptions and the reality of "higher-for-longer" interest rates. Tobias Wens, a BCG managing director and co-author of the report, said European companies have emerged from a difficult five years carrying more debt while their ability to withstand setbacks has declined. "If business plans fail to materialize, or if there is another shock, companies will have fewer options to respond than they did a few years ago," he said. + European companies face transformation pressure The report shows real estate companies stand out in particular, with about 62% of real estate companies facing transformation pressure, compared with only 12% in 2025. Economic uncertainty and higher long-term interest rates have weighed on real estate valuations and transaction activity, while also making real estate less affordable for buyers. About 28% of automotive companies also face restructuring pressure, due to factors including weak demand, overcapacity, the costs of transitioning to electric vehicles, and increasingly intense competition from China. About one-fifth of media and publishing companies are also facing more severe pressure, because audiences and advertising are shifting to online platforms and content creators, while AI-mediated information discovery methods are also evolving.