cloud spending — European cloud spending is on an upward trajectory, with projections estimating a total of $229 billion by 2025 and an impressive $452 billion by 2029, according to the Worldwide Software and Public Cloud Services Spending Guide from the International Data Corporation (IDC).
- This growth reflects a significant five-year compound annual growth rate of 19 per cent from 2024 to 2029.
- Volatility from US tariff negotiations could also affect sectors like automotive and consumer goods, but IDC remains optimistic about the resilience of cloud investments across Europe.
This growth reflects a significant five-year compound annual growth rate of 19 per cent from 2024 to 2029.
Cloud spending: Embracing Automation and AI
As businesses focus on efficiency and automation, the demand for artificial intelligence solutions is driving further investment in platform-as-a-service (PaaS). IDC forecasts a remarkable 32 per cent year-on-year growth in spending on PaaS by 2026, highlighting the increasing reliance on technology to enhance operational capabilities.
Industry Resilience Amid Uncertainty
Despite potential challenges in the latter half of 2025, including uncertainties stemming from US tariffs, many European industries are adopting a ‘business-as-usual’ approach. Andrea Minonne, research manager at IDC UK, noted, “Most sectors, including automotive, consumer goods, and manufacturing, are exercising caution, but the overall outlook is not concerning.”
Minonne further emphasised the critical role of cloud technology in manufacturing, stating, “Cloud continues to be crucial for manufacturing, enabling solutions that improve supply chain visibility and facilitate agile inventory management.”
Geopolitical Factors at Play
The current geopolitical landscape presents several risks that could impact technology spending. The ongoing conflict in Ukraine has raised discussions around increased defence spending among NATO countries, while tensions in the Middle East may disrupt supply chains for European businesses reliant on Asian imports.
Volatility from US tariff negotiations could also affect sectors like automotive and consumer goods, but IDC remains optimistic about the resilience of cloud investments across Europe.
Cybersecurity and Regulatory Compliance Driving Investment
Cloud technology is becoming increasingly essential for addressing key priorities, particularly in cybersecurity. European federal and central governments are anticipated to significantly increase spending on security software in response to growing threats.
Moreover, regulatory compliance will sustain cloud service investments across heavily regulated industries, including finance and healthcare. The need for secure and compliant solutions is driving organisations to invest more heavily in cloud infrastructure.
Healthcare Sector Leading the Charge
The healthcare sector is poised to see the fastest growth in cloud investments, with healthcare payers and insurers expected to increase spending by 25 per cent in 2026. This trend is particularly pronounced in the UK, where inefficiencies within the National Health Service, such as lengthy waiting times, are prompting more citizens to seek private health insurance.
Life sciences companies are also ramping up cloud investments, spurred by robust research and development in advanced therapies, significant European Union funding initiatives, and a shift towards digital transformation in drug discovery and innovation.
