Europe’s economy stabilized in 2025 after overcoming energy, inflation, and trade shocks following the COVID-19 pandemic. However, the war in the Middle East has increased uncertainty in 2026, with oil price shocks remaining a key headwind to economic growth amid weaker global trade and heightened geopolitical risk. Forrester recommends that business and IT leaders in Europe boost investments for economic and technology sovereignty by rationalizing technology portfolios, diversifying supply chains, and adopting minimum viable sovereignty.