Skip to main content

Europe’s technology sector in 2030: Technological stagnation

Great tech stagnation: Is it finally over?

It’s 2030, and Europe’s economy has been emaciated by a decade of stagnation in its application of technology and decline in its indigenous technology sector.

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


Europe’s role in developing frontier tech has diminished steadily over the decade. This is the result of constraints on technology suppliers, and constraints on the application of technology among businesses. Europe’s significant spend on tech R&D is squandered on non-commercial technologies that might never become commercially viable.

Talent availability


Regrettably but unsurprisingly - most of the best tech talent has emigrated or changed industry. The exodus includes those who would have created intellectual property fo tech companies, but also integrators those who would have deployed it for enterprises, consultants who would have reinvented processes within industries based on new technologies, financiers who would have invested in emerging tech companies, and creators who would have made content based on the latest technology platforms.

Management philosophy


Europe still generates entrepreneurs, but those focused on tech do not feel welcome in the region, and those with the best ideas and experience tend to early exit or move their operations outside of Europe. A few serial-entrepreneurs return to Europe, but often soon depart again, frustrated at the challenging conditions. Tech companies that remain are mostly focused on releasing government subsidies to invest in Europe’s preferred technologies. The diminishment of the tech sector also causes a stasis in management culture; during the 2010s, new management approaches such as agile development were shifting behaviors in all industries. But when tech companies left, management science stagnated.

Availability of capital


Venture capital, which had been growing fast in Europe contracted rapidly. Ambitious startups started looking for venture capital outside of Europe which was readily available – particularly for companies prepared to move.

Economic environment


Europe’s economy has contracted as a result of the multiple constraints on using technology. The GDP for most countries is static or falling. The most productive workers have left.

Political environment


Bashing and blaming tech companies, has been effective at the ballot box, resulting in ever more onerous regulations. As leaders are elected democratically, voters are arguably equally culpable. Some commentators have remarked that social media algorithms have promoted the sharing of the tech bashing soundbites of populist leaders, but the same comment could also be levelled at the traditional media industry, whose news bulletins are also curated by algorithms.

Global influences


Foreign governments with indigenous tech industries have long been frustrated by Europe’s regulations. Ironically, the more that regulations have constrained global tech companies, the more Europe has become reliant on them. The balance of power is shifting: the ratcheting up of regulation will have to be reversed.
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.

Europe now has two companies with a trillion-dollar valuation, and Europe’s economy is technology-centric.
Find out more

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.

Find out more

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.

Find out more


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:

  1. Frontier technologies. The extent to which core technology, which has the greatest commercial value add, is developed in Europe.
  2. Talent. The availability of talent wishing to, and able to work in, the European tech sector, or a subset of it.
  3. Management philosophy. The approach to managing businesses, including willingness to take risk and the appetite for audacity.
  4. Availability of capital. The maturity of various classes of investors: funds available, risk appetite, the understanding of tech business models.
  5. Economic environment. Wealth levels, economic inequality within countries, wealth contribution by sector; wealth gaps between countries in Europe.
  6. Political environment. Attitudes towards the technological sector, including sobriety of regulation and support for wealth creation.
  7. 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. 

Did you find this useful?

Thanks for your feedback

If you would like to help improve further, please complete a 3-minute survey