Portuguese Businesses Are the Most Pessimistic in Europe — 1 in 4 Expects Revenue to Fall

Portugal's business community has emerged as the most downbeat in Europe, with nearly one in four companies expecting their revenue to decline this year, according to a new pan-European barometer published by the ERA Group consultancy.

The survey, which polled more than 1,000 business leaders and decision-makers across the continent, found that 23 per cent of Portuguese firms anticipate a drop in turnover in 2026 — the highest share of any country analysed. The findings mark a dramatic reversal from just 12 months ago, when 63 per cent of Portuguese managers expected revenue growth. That figure has now collapsed to just 39 per cent.

Storm Damage, Tariffs, and Geopolitical Risk

The pessimism is rooted in a uniquely challenging confluence of factors. The severe weather depressions that battered the country in early 2026 caused an estimated two billion euros in economic damage, disrupting supply chains and forcing businesses to absorb unplanned costs. Meanwhile, the escalation of the Middle East conflict has pushed energy prices sharply higher — with diesel already breaching the two-euro-per-litre threshold — and the looming 20 per cent US tariff on EU goods, set to bite from April 9, is adding further uncertainty to export-dependent sectors.

Portugal's profile stands out as markedly more cautious than peers such as Spain, Sweden, and the United Kingdom, which all registered stronger growth expectations in the same barometer.

Profitability Under Pressure

On the profitability front, the picture is mixed. More than half of Portuguese organisations — roughly 57 per cent — still expect their EBITDA to improve this year, but that figure sits below the European average. Companies report that margin compression from rising input costs, particularly energy and raw materials, is outpacing their ability to raise prices in a consumer market already squeezed by inflation.

The ERA Group barometer also noted a growing divergence between large corporates, which retain some pricing power and international diversification, and small and medium-sized enterprises, which are bearing the brunt of domestic cost pressures.

A Confidence Crisis at a Critical Moment

The timing of this confidence slump is particularly significant. Portugal's government has been pursuing a pro-business agenda, cutting the headline corporate tax rate to 19 per cent this year as part of a phased reduction to 17 per cent by 2028, and positioning the country as a competitive destination for investment. Yet the barometer suggests these structural reforms have yet to outweigh the immediate headwinds.

With the CGTP union confederation calling a national strike for April 17, labour tensions simmering over the government's reform package, and global trade uncertainty intensifying, Portuguese business leaders appear to be battening down the hatches rather than planning for expansion.

Sources: ERA Group European Business Barometer via Jornal Económico, TSF