The European tech industry is often said to have fallen behind its Chinese and American counterparts. However, it could be the key to boosting growth in the continent’s economies.
Of the 300 companies surveyed as part of the Financial Times report into Europe’s Long-term Growth Champions, tech businesses made up almost 20 per cent — the largest proportion of any sector.
Virta, an electric vehicle charging company, which says its platform provides access to more than 550,000 charging points in more than 65 countries, is top of the overall list. The Helsinki-based company’s co-founder Jussi Palola, says the company’s ability to navigate the electric vehicle “hype cycle”, has been the key to that success.
“Since 2013, our software platform has enabled the professional build-up of more than a 1,000 charge-point operators in Europe and south-east Asia . . . replacing over 100mn litres of fossil fuels in a year. This has been the key to our growth,” he says.
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The growth of Virta demonstrates that the technology sector includes not just the headline-grabbing sectors of AI and defence.
Yet although European tech companies are growing fast, the industry’s biggest names are almost exclusively American or Chinese, with many European companies forced to look beyond their home markets for capital and customers.
“I think it’s really crucial that we have deep technology expertise, investment in new technologies. I don’t think we or the broader community in Europe want to end up in a situation where most of that investment happens outside of Europe,” Palola adds.
In the UK, Europe’s largest tech economy in total value according to the Tech Nation report 2025, just £16.2bn was raised by start-ups, many of which were tech companies, in 2024, compared to more than £65bn by their Silicon Valley counterparts.
The London Stock Exchange, Europe’s main listing venue, has also seen a recent dearth of listings as potential initial public offerings have been drawn to the tech-friendly Nasdaq in New York.
Barney Hussey-Yeo, who is moving towards trying to list his UK-founded AI fintech Cleo, recently claimed on LinkedIn that a Wall Street investment banker had “laughed” when he suggested London as a listing venue.
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To confront the challenge, lobby groups on both sides of the English Channel are pushing to force the authorities in Brussels and London to make the changes needed to allow European tech companies to continue to thrive.
“Tech is absolutely fundamental to the success and growth of the UK economy,” says Antony Walker, deputy chief executive at industry lobby group TechUK. “You only have to look at the role that AI is playing at the moment to understand that digital tech is . . . fundamental to productivity growth and innovation.”
Walker points to research in the Tech Nation report 2025 that found the UK’s technology sector was valued at more than $1.2tn and was growing at 12.5 per cent a year. But he cautioned that the sector’s future success is far from certain.
“The UK, given its size, is in a remarkably strong position — probably the third-largest tech sector after the US and China, but you cannot take any of that success for granted,” Walker adds. “We are competing for that third place on the podium and that is a tough place to defend at a time when other economies can bring more resources and investment.”
To try to stimulate the sector, the UK government has pushed several reforms, including launching an industrial strategy that has a sector plan for technology, as well as changes to public markets to make listing more attractive.
There is a growing understanding of how important tech is to the rest of the economy, but it is still probably underestimated
Antony Walker, TechUK
“There is a growing understanding of how important tech is to the rest of the economy, but it is still probably underestimated,” says Walker.
Within the EU, the picture is similar, with tech founders and lobby groups urging Brussels to streamline regulation and double down on a single market approach in order to reduce complexities and allow companies to thrive.
In a well publicised report into EU competitiveness last year, former president of the European Central Bank Mario Draghi, said the continent must “profoundly refocus” on “closing the innovation gap with the US and China, especially in China”.
Guénolé Carré, policy officer at the European Tech Alliance, a lobby group that contributed to the Draghi report, says the lack of scale of the continent’s tech companies could be addressed by a unified regulatory approach. “If you operate in 10 countries, you could be subject to 8 different rules,” he says, adding that Europe’s success should be “forging its own path”, rather than trying to emulate the US or China.
“We have the talent and potential — we need to let that flourish,” he says.
The Tech Alliance — which counts food delivery company Delivery Hero, music-streaming service Spotify, Bolt, the ride-hailing company, and Vinted, the online marketplace, among its members — called this year for Brussels to cut red tape in the industry by centralising guidance across the 27 member states and forming a new tech strategy to “empower” companies.
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However, progress has been slow. Despite steps in the past 12 months such as a new start-up and scale-up strategy, in addition to investments such as €70bn earmarked to support innovative companies via TechEU, part of the European Investment Bank, experts say more action is needed.
In a one year update to his report, Draghi said in September that three areas need addressing regarding technology: removing barriers to scaling up; regulation; and the integration of AI into industry.
“Europe’s citizens are asking that their leaders raise their eyes from their daily concerns towards their common European destiny and grasp the scale of the challenge,” Draghi said.
“Only unity of intent and urgency of response will show that they are ready to meet extraordinary times with extraordinary action.”
