Moody’s Downgrades Volkswagen’s Credit Rating Amid Profitability Concerns

by THEFUTURE.TEAM

March 18, 2025

Volkswagen’s financial standing took a hit as Moody’s downgraded the automaker’s long-term credit rating from “A3” to “Baa1”, citing shrinking profit margins, weakening free cash flow, and intensifying competition from Chinese automakers. The downgrade signals moderate credit risk, meaning Volkswagen’s debt, while still investment-grade, now carries speculative characteristics.

Why The Downgrade?

Moody’s decision reflects Volkswagen’s declining operating profits and ongoing financial pressures. Despite being Europe’s largest carmaker, the company is navigating a turbulent landscape shaped by:

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Rising investment demands in electric vehicle (EV) production.
Cost-cutting measures in key markets like Germany and China.
Geopolitical trade tensions, particularly with China, which is driving down profits.

Volkswagen itself acknowledged the uphill battle, warning last week that 2024 will be another year of challenges as it tries to increase EV sales, reduce costs, and fend off competition from aggressive Chinese automakers. The company expects up to €1 billion in lost profits in China by 2025.

Can Volkswagen Recover?

Despite the downgrade, Moody’s remains cautiously optimistic about Volkswagen’s long-term outlook. The agency believes that if cost-cutting measures and strategic shifts are successfully implemented, the company could see improved profitability by 2026-2027.

Volkswagen’s strong balance sheet and robust liquidity give it time to execute its turnaround strategy. However, lower credit ratings often increase borrowing costs, which could add further pressure as the company ramps up investments in new EV models and technology advancements.

What’s Next?

While Volkswagen remains three notches above junk status, the downgrade serves as a warning that its financial resilience is being tested. With competition heating up and margins tightening, the automaker’s ability to balance aggressive EV expansion with profitability will determine whether it can regain lost ground—or face further credit downgrades in the future.

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Cyprus’ Strong Youth Employment Rate Still Does Not Guarantee Early Independence

by THEFUTURE.TEAM

September 16, 2026

Young people in Cyprus have a relatively high employment rate, but they leave the parental home later than the EU average, according to Eurostat data.

Cypriots left home at an average age of 27 in 2025, compared with 26.3 years across the EU. At the same time, 72.3% of people aged 20 to 29 in Cyprus were employed, well above the EU average of 65.5%.

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Strong Employment Does Not Mean Early Independence

Only nine countries recorded higher youth employment rates than Cyprus. Iceland led at 85.3%, followed by the Netherlands at 84%, Malta at 82.1%, Switzerland at 78.3% and Germany at 77%.

Norway recorded 76.5%, Ireland 76.1%, Denmark 74.8% and Austria 74.6%. Eurostat said countries where young people leave home earlier generally tend to have higher youth employment rates.

Southern Europe Sees Later Moves

Finland had the lowest average age for leaving the parental home at 21.4 years, followed by Denmark at 21.8 and Estonia and Lithuania at 22.7. Croatia recorded the highest average at 31.5 years, followed by Greece and Slovakia at 30.9. Spain and Italy both stood at 30.2 years.

Across the EU, the average has remained close to 26 since 2002, rising only slightly from 26.2 years in 2024 to 26.3 years in 2025.

Cyprus Labour Market Is Cooling

The figures come as Cyprus’ labor market shows some signs of easing, although demand for workers remains relatively strong by European standards.

Separate Eurostat data showed Cyprus had the EU’s largest annual decline in its job vacancy rate in the second quarter of 2026. The rate fell to 2.6% from 3.3% a year earlier, but remained above the EU average of 2.0% and the euro area average of 2.1%.

Cost Of Living Remains A Factor

Housing and other living costs can also affect how quickly young workers establish independent households. Eurostat reported that Cyprus’ household consumption price level was 89.2% of the EU average in 2025.

A relatively lower overall price level does not eliminate affordability pressures for people on modest incomes. For younger workers, the issue can be whether wages are sufficient to cover rent, utilities, food and other basic expenses.

Cyprus therefore combines relatively high youth employment with a later transition to independent living, suggesting that access to work and the ability to afford a separate household do not always move together.

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