BRUSSELS: One in six companies in western Europe is under financial strain as rising leverage leaves businesses more vulnerable to shocks, according to Boston Consulting Group (BCG).
The pressure is broadest in Spain and Portugal, where 22% of companies need to transform their businesses, BCG found in a report, which analysed around 1,700 publicly traded European companies.
Across Europe, transformation pressure rose to 16.2% from 14.3% last year.
France, and the DACH region, which includes Germany, Austria and Switzerland, are home to the highest percentage of businesses facing sharper stress, or restructuring pressure, at 10% each.
Net-debt-to-earnings before interest, taxes, depreciation and amortisation ratios, a gauge of overall indebtedness, increased 22% between 2022 and 2025.
Almost a third of companies began 2026 with ratios above three times, which BCG considers the threshold for financial stress.
Many borrowers are struggling to de-leverage after loading up on cheap debt during the pandemic.
That leaves them less able to weather surging energy costs, trade disruption and the reality of higher-for-longer interest rates.
European companies have emerged from five difficult years with more debt and less capacity to withstand setbacks, said Tobias Wens, a BCG managing director and co-author of the report.
“If business plans do not materialise or there is another shock, companies will have fewer options than they did a few years ago,” he said.
Property firms stand out, with about 62% under pressure to transform, compared with just 12% in 2025, according to the report.
Economic uncertainty and higher long-term rates have weighed on valuations as well as dealmaking while property became less affordable for buyers.
Some 28% of automotive companies also face restructuring pressure amid weak demand, overcapacity, the cost of shifting to electric vehicles and growing competition from China.
About a fifth of media and publishing companies are also seeing more acute stress as audiences and advertising move to online platforms and creators, as well as artificial intelligence-mediated discovery. — Bloomberg
