Fitch cuts sector outlooks as global trade risks climb
Western European sovereigns are under increasing fiscal pressure due to deteriorating macroeconomic conditions, heightened geopolitical risk, and significant new defence spending commitments. Fitch said that most countries are unlikely to implement sufficient fiscal consolidation to offset these medium-term costs, putting further strain on public finances.
Fitch Ratings has downgraded multiple 2025 sector outlooks to 'deteriorating' due to rising trade risks, fiscal strain, and a global slowdown. Western European sovereigns face pressure from defence spending, while tariffs and trade shifts hit corporates and ports. Revenue forecasts for 2025 were cut by 3.4pp, especially in automotives, oil and gas, and chemicals.
The ratings agency also downgraded the outlook for multiple corporate sectors and ports, which are being directly impacted by tariffs, shifts in global trade routes, and second-order effects of trade disruptions. The 2025 leveraged finance outlook has also turned negative, with Fitch noting that leveraged issuers are particularly vulnerable if funding conditions tighten further.
European corporate revenue forecasts have been lowered across most sectors, with Fitch cutting its top-line growth expectations for 2025 by an average of 3.4 percentage points since December 2024. The steepest revisions were seen in automotives, oil and gas, and chemicals.
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