The European Central Bank's Survey on the Access to Finance of Enterprises (SAFE) for the second quarter of 2026 shows that Middle East geopolitical tensions are disrupting corporate expectations across the euro area, with trading firms, exporters, and small and medium-sized enterprises (SMEs) facing significantly higher risk exposure than larger corporations.

This edition of the survey added a special set of questions to track changes at companies following the outbreak of Middle East hostilities on February 28. The sample also covers respondents interviewed before and after the release of the US-Iran Memorandum of Understanding (MoU) on June 14, with roughly one-quarter of questionnaires completed after the memorandum was published. However, the data indicates that this MoU did not noticeably alter corporate assessments of the conflict's economic impact. With maritime attacks resuming in early July, geopolitical risks remain persistent.

In terms of risk exposure, using a 1-to-10 impact rating scale, 35% of SMEs scored their exposure at 7 or above, compared to just 28% of large firms. Exporters, due to their deep involvement in global trade, are more susceptible to supply chain disruptions. SMEs, meanwhile, are more sensitive to energy shocks because of their limited cost buffers and weaker ability to adjust supply chains.

By sector, wholesale and retail trade industries have the highest share of firms facing elevated risk, while domestic-oriented service sectors reported the mildest impact. The conflict is primarily driving up corporate expectations for nominal variables such as input costs and selling prices, while having a relatively limited effect on real variables like employment and working hours.

A net 79% of firms expect input costs to rise over the next twelve months, with a net 58% anticipating higher selling prices and a net 43% forecasting wage increases. Meanwhile, a net 40% of firms have downgraded their profit expectations, and a net 14% see weaker demand. Overall, corporate expectations for employment and total investment remain broadly unchanged, but among high-exposure firms, a net 11% expect investment growth to come under pressure.

Quantitative expectations for costs and selling prices remain above pre-conflict levels, though wage growth expectations have eased. In the second quarter, corporate expectations for revenue, investment, and employment weakened compared to pre-conflict readings, with revenue expectations declining the most. Among high-risk firms, only a net 10% expect revenue growth and a net 2% are positive on investment, both far below the pre-conflict first-quarter readings of a net 34% and net 14%, respectively. Overall employment growth expectations slipped from 1.4% to 1.0%, while heavily impacted firms expect just 0.5%.

Faced with geopolitical risk, roughly two-thirds of firms have activated contingency plans. The most common measures include seeking alternative suppliers for raw materials and components (36%), increasing investment in energy efficiency and renewable energy (31%), and switching energy supply channels (29%). High-exposure firms are more proactive, with only 28% taking no action, and among those acting, 44% are searching for alternative input suppliers. Only a very small number of firms plan to withdraw from conflict-affected export markets, while many low-risk companies are also preparing in advance to hedge against future geopolitical shocks.