Europe’s technology sector in 2030: Technological stagnationGreat tech stagnation: Is it finally over?
The 2020s had started so brightly: Europe had been catching up with other regions in terms of tech start-up activity and IPOs. But as the decade progressed, there was a gradual implosion in tech entrepreneurship. Emboldened by informal acclaim as the world’s tech regulator in the area of privacy and data protection, officials doubled down and introduced additional, more restrictive regulation on the technology sector.
Its ostensible intent was to protect the consumer; the outcome was a diminished tech sector. The companies most able to prepare and adhere to new regulations were the largest, global tech companies. By contrast, less capitalised European start-ups and tech companies struggled to deploy sufficient resources to comply with incoming regulations in a timely manner and had less funds to invest in growth. Greater regulation of technology became a barrier to entry, and a disincentive to entrepreneurs, who switched sector, or left the region. Consequently, the European consumer ended up with constrained choice and, occasionally, higher prices.
And so, by 2030, Europe was what some termed a tech desert. Its home-grown technology sector had shrivelled, and foreign tech companies no longer regarded Europe a primary market to sell into the region. European companies from all industries spent less on technology than their global counterparts. European universities, which had been growing their technology research departments, reversed course.
The European economy shrank in tandem with the diminishing role of the European technology sector. Throughout the 2020s, technology was increasingly being deployed around the world to make businesses digital at their core, and more productive and competitive as a result. This wave of digital investment, known as the transforming twenties, had been catalysed by the shock of the global pandemic at the start of the decade. The existential shocks many companies had faced galvanised them into accelerating their digitization plans. Tech suppliers scrambled to accommodate this surge in demand; those that managed saw their valuations soar, with a dozen companies worth over a trillion dollars by the mid-point of the decade.
Europe was the exception, where new regulation, particularly concerning patents, data, privacy, investments and sustainability ended up throttling the supply and demand for technology. Regulations were well-meant – intended to protect people and the planet – but the regulations lacked nuance, and so ended up casting out the proverbial baby along with the bath water.
One example of misshapen policy is the fate of the smartphone sector. As of 2020, the smartphone supported trillions of dollars of economic activity annually in Europe -- despite there being no major European smartphone brands. The region’s mobile networks relied on annually updated smartphones from global vendors to drive demand for larger data packages, and to justify upgrades to European-built 5G networks. European tech provided the underlying architecture for every smartphone, and its algorithms enabled tiny smartphone cameras to out-perform digital SLR cameras in all light conditions. Office workers relied on the devices to stay informed. The European logistics industry’s business models depended on the availability of smartphones and mobile networks. Governments around Europe had moved most major customer-facing processes to self-service apps, driving significant efficiencies. The automotive industry was able to reverse rising rates of car theft by digitising the key into an app on a smartphone. The creative industry made music, games and memes for small screens.
However, by 2030, most major smartphone vendors had scaled back their focus on Europe as the primary go-to market for their latest innovations. This was the culmination of a five-year exodus that could readily have been averted, and which could, with changes in policy, still be reversed within a year.
The start of the end was a mandate in 2024 to use a European designed charging cable. This required a major re-design of devices to accommodate an additional port. This was followed in 2025 by the mandate that any smartphone sold in Europe had to offer security updates for at least six years. This prompted smaller vendors, including those specialised in industrial applications such as delivery and inspection to exit the market. They were unable to afford this commitment. The proposal all batteries, processors and screens should be user-replaceable by 2028 prompted premium vendors to defer releases of their latest products.
As a result, some sectors, such as instant grocery delivery, which had generated multiple unicorns as of 2021, decided to abandon the parts of the European market that their preferred device vendors had exited from.
The mobile video games sector, which had been thriving in Europe, shifted outside the region, as it became increasingly hard to build and test apps for the latest devices.
Retailers, which had been developing ever more attractive mobile sites, were forced to build content optimised for ever older phones, leading to the exit of the best app developers who left for markets where they could build for the latest technology.
As tech companies of all types departed, they left economic craters. The impact of each departure was minimal at a European level, but painful and high-profile in the cities and towns that had been abandoned. As more and more tech companies shifted their focus abroad, leaders in individual countries started questioning regional policy.
In 2030, there is still a projected $43 billion of research and development investment, with increasing funding coming from regional and national governments to compensate from the decline in private investment. Funding was limited to areas adhering to European values, namely cloud computing, virtual reality, remote surgery, quantum computing and ethical AI. However, the real-world applications for quantum similarly remained in the distant future, as had been the case in 2020, 2010 and 2000.
The drivers and enablers of the tech desert scenario.
Development of frontier technology
Availability of capital
This scenario is one of four fictionalised views of the future, each of which features made-up companies but with each narrative extrapolated from real trends, events and technologies.
Trillion dollar companies in 2030: Forecast
Europe now has two companies with a trillion-dollar valuation, and Europe’s economy is technology-centric.
Europe’s future cash cows: will they stay or go?
European companies have deployed technology effectively, enabling transformation, which has yielded greater cash flows. But Europe still lacks any global tech giants of its own.
Tech hubs in Europe: A big split in Europe's tech sector in 2030
A minority of European countries are now home to significant technology companies, and their economies are thriving. The remainder, and also the majority of countries however have failed to reap the tech dividend.
Meet our European technology sector specialists
NSE Technology Sector Leader, Deloitte Netherlands
NSE TMT Industry Leader, Deloitte UK
Global Head of Research - TMT, Deloitte UK
UK TMT Marketing Lead, Deloitte UK
Manager - Human Capital, Deloitte Netherlands
Dr. Andreas Gentner
TMT Industry Lead – Germany
TMT Industry Leader – Ireland
TMT Industry Leader - UK
TMT Leader – Deloitte Central Mediterranean
Technology Sector Leader - Belgium
Technology Sector Leader – The Netherlands
MT Industry Leader – Portugal, Head of Telecom Engineering Centre of Excellence
Our in-depth research has identified the key developments and trends shaping the future of the European tech sector.
Tens of thousands of news articles and blogs about the future of the European tech sector were analyzed by Deep View, our AI tool. These include deep dives into the US-CN relationship, ecosystem and funding, and cross-industry applications.
Interviews were conducted with subject-matter experts from Deloitte, technology businesses, investors and industry bodies, covering the most crucial economic, political, socio-technological and environmental developments surrounding the European Tech Sector.
We combined two critical uncertainties - “Attractiveness of Europe for tech companies” and “Europe's technological primacy”. This resulted in four distinct futures, which were further developed considering the driving forces with low uncertainty and high impact, so called trends.
Underpinning each scenario are seven core drivers and enablers:
- Frontier technologies. The extent to which core technology, which has the greatest commercial value add, is developed in Europe.
- Talent. The availability of talent wishing to, and able to work in, the European tech sector, or a subset of it.
- Management philosophy. The approach to managing businesses, including willingness to take risk and the appetite for audacity.
- Availability of capital. The maturity of various classes of investors: funds available, risk appetite, the understanding of tech business models.
- Economic environment. Wealth levels, economic inequality within countries, wealth contribution by sector; wealth gaps between countries in Europe.
- Political environment. Attitudes towards the technological sector, including sobriety of regulation and support for wealth creation.
- Global economy. Attitudes to Europe and its tech sector from countries outside of Europe.
Each scenario is a fictionalised view of the future, featuring made-up companies, but with each narrative extrapolated from real trends, events and technologies. Whilst each outcome is possible, with some more likely than others, Deloitte has created these scenarios to foment discussion on which outcome is desirable, and what needs to happen to get there.
Future of the Tech Sector in EuropeThe scenarios