Europe's IT spend to surge 11% as cloud sovereignty fever takes hold

IT spending in Europe will grow 11 percent next year to hit $1.4 trillion amid a desire for cloud sovereignty, according to Gartner.

The figure is set to reach $1.3 trillion by the end of 2025 after growing 11.6 percent over the previous year.

Spending on GenAI models is set to grow 78 percent next year in Europe as organizations look to increase investment in AI, cloud, and cybersecurity.

Interest in sovereign cloud, powered by geopolitical uncertainty, is also driving spending. In a separate survey of CIOs and tech leaders in Western Europe earlier this week, Gartner found 61 percent want to increase their use of local cloud providers. Around half (53 percent) said geopolitics would restrict their use of global providers in the future.

Speaking to The Register about the latest spending forecasts, John-David Lovelock, distinguished VP analyst at Gartner, said: "The European economy is somewhat different to the rest of the world. Europe is still struggling with an overall GDP recovery, much more susceptible to the uncertainty with their global trade. They are looking at 'geo-repatriation,' a portion of the digital sovereignty movement who is trying to get more technology from companies closer to home."

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Other global trends are affecting Europe too. Software is becoming more expensive because it is packaged with AI. Meanwhile, spending on PCs, tablets, and laptops will be about the same next year.

"Server build-out for enterprises is about the same as next year, but when it comes to the sort of massive infrastructure investments in AI, that's really still centered in North America with the majority of the investment in AI occurring in the US," Lovelock said.

Nonetheless, spending on datacenters is set to grow at 38.2 percent in 2025 to reach $83.6 billion. Growth is set to slow to 18.8 percent next year as total datacenter spending hits $99.3 billion.

Lovelock said geopolitical uncertainty, such as the Ukraine war, had to some extent been factored into Europe's IT spending decisions.

"Mark Carney, the Prime Minister of Canada, really does seem to be setting the tone. He says, 'We will control the things that we can control.' The business community has picked this up as well and said they will do what is in their control, and work on agility, should there be any other shocks. We're on a curve for revenue increase and new product expansion. We're now seeing companies resettle and say, 'Where can I grow my business again?'" ®