Recessions risks are rising. We have applied three hypothetical downturn scenarios to European speculative-grade nonfinancial entities we rate to assess the impact of varying degrees of downturn. The most severe would deliver a 20% fall in EBITDA by end-2023, in line with previous cycles. European corporates should weather a milder downturn well. Financial metrics might deteriorate, but not beyond pandemic peaks, and pressure would be confined to the most vulnerable issuers. But a full-blown recession would stretch financial metrics beyond pandemic levels and pressure ratings further. This could increase median 2023 leverage to 7.8x versus a pandemic peak of 6.6x and our base-case assumption of 5.3x. Half of spec-grade issuers could have negative free operating cash flow. Downgrade risk in the ‘B’ rating category and below would be significant.