After a robust 2025, Europe’s tech industries’ growth under threat again
Thursday 16 April: Europe’s technology industries are expected to return to growth in 2026, with turnover projected to rise by +1.8% and investment by +0.7%. It’s a welcome shift after a difficult 2025, when both investment and employment declined, even as the sector held up better than might have been expected given the pressures it faced.
There are some encouraging early signs of recovery. Order books have started to fill again, investment is stabilising, and confidence picked up towards the end of last year. However, this progress remains fragile and is increasingly threatened by geopolitical tensions, particularly the conflict in Iran. A prolonged crisis could disrupt energy infrastructure, triggering inflation and a broader industrial slowdown.
We aim to develop the most accurate possible picture of the European technology industries and provide forecasts for the year ahead.
The picture also varies widely across sectors. Electrical engineering and ICT are clearly leading the way, supported by strong demand linked to AI and electrification. Mechanical engineering is also set to pick up, with advanced manufacturing technologies gaining traction. By contrast, metal technology is recovering more slowly, weighed down by the ongoing weakness of the automotive sector, although defence-related demand is providing some support.
Trade patterns are also shifting. Exports to the United States declined in 2025 due to tariffs, while intra-European trade continues to grow, reflecting a move toward regionalisation.
On the labour side, the situation is stabilising but not improving just yet. Employment is expected to decline slightly again this year, and longer-term challenges, especially an ageing workforce, are becoming harder to ignore. Attracting new talent and keeping experienced workers in the sector will be essential.
Our recovery is already under severe threat from the conflict in Iran. Rather than a completely new approach, this shock reinforces the need to accelerate and sharpen existing priorities.
Much will depend on the policy environment in the months ahead. Energy costs remain a major concern, and steps to bring them down could make a real difference. At the same time, progress on trade agreements would help open up new markets and strengthen resilience.
Overall, Europe’s technology industries enter 2026 with cautious optimism, but their recovery remains highly sensitive to external shocks and policy decisions.