The Forward Look—European and UK Credit Views: Q1 2026
Key Takeaways
European growth is showing early signs of improvement.
Spreads remain tight and credit fundamentals are robust, although volatility is likely as geopolitics evolve.
Inflation is largely under control for now; however, early indicators suggest potential reemergence.
Forward View
Growth Outlook: Potential Acceleration
We expect European tailwinds to begin taking hold in 2026, with growth potentially surprising to the upside. The region is benefitting from several structural and cyclical factors that are consistent with a return to more positive growth dynamics. While several headwinds remain, the transition towards a more supportive environment is becoming more evident.
Monetary stimulus via low short-term interest rates, combined with rising government spending, should help underpin economic activity. The scope for additional leverage—supported by a strong banking sector, resilient corporate balance sheets, and elevated household…
Inflation:…
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