• S&P Global Ratings expects credit prospects to deteriorate, financing conditions to tighten, and default rates to rise toward 2.5% by year end, seeing the seismic shock from the invasion of Ukraine representing a turning point in the credit cycle. • Energy security, further supply chain disruptions, and rising inflation pressures are the risk factors most likely to affect European credit conditions in the coming months. • We expect the 14-month improving trend in credit quality to reverse as slowing growth and higher cost input pressures increasingly weigh on corporate margins through the year. • Financing conditions in Europe should tighten as central banks move into tightening mode to counter elevated inflation pressures even as growth slows. • EU and U.K. growth are forecast to slow to a 3.3% and 3.5%, respectively, for 2022.