London, February 13, 2025 — According to the Worldwide Software and Public Cloud Services Spending Guide published by International Data Corporation (IDC), public cloud services spending in Europe will total $221 billion in 2025 and will reach $373 billion by 2028, recording a five-year (2023-2028) compound annual growth rate (CAGR) of 20%. Platform-as-a-service (PaaS) will continue to be fastest-growing area, fueled by the increasing demand for AI applications, integration of cloud ecosystems, and the need for scalable platforms to support digital transformation.
Some headwinds will linger from 2024, while new uncertainties will threaten European economic stability. The potential tariffs and trade tensions between the United States and the European Union stemming from the new U.S. administration, persistent economic weakness in Germany, and growing competition from China might create challenges for some European industries. As Europe’s economic growth in 2025 remains uneven, this landscape could dent consumer and business confidence, impacting budgets dedicated to cloud-based transformational projects.
“Manufacturing industries, especially chemicals and automotive, are paying the effects of prolonged supply chain disruptions, lower demand, skill shortage, and tough global competition. Deteriorating business confidence will slow down cloud spending, which will still grow but at a slower place compared with verticals like banking or software and information systems,” says Andrea Minonne, research manager at IDC U.K. “Nonetheless, cloud is a growing market and investments will be driven to support automation and tech such as AI and generative AI .”
Banking, software and information services, and insurance will be the industries with the fastest year-on-year spending increases in 2025. Threat intelligence requirements will push banks to build AI-powered tools that can rapidly categorize and summarize data to identify potential threats, requiring a strong cloud foundation. Moreover, last year’s strong investments in datacenters across Europe will support cloud spending to support GenAI and other technologies that will be used in areas including risk assessment, customer service, and back-office process optimization.
Looking at the long term, software and information services will have the highest value 2023-2028 CAGR in Europe, at 24%. The industry’s spending growth will be fueled by rising demand for AI/GenAI solutions, increased investments in R&D for cybersecurity, and the adoption of scalable SaaS solutions. Insurance and life science will also grow their public spending more rapidly than other verticals. Insurance companies will invest in public cloud to modernize core systems, automate operations, and integrate AI-driven risk management to enhance compliance, efficiency, and customer experience. Despite near-term supply constraints and manufacturing limitations, life sciences companies are investing in AI-driven drug discovery, expanding production capacity, and strengthening digital supply chain resilience.
About IDC’s Worldwide Public Cloud Services Spending Guide
The IDC Worldwide Software and Public Cloud Services Spending Guide quantifies public cloud computing purchases by cloud type for 28 industries and 8 company sizes across 53 countries. This comprehensive spending guide was designed to help IT decision makers clearly understand the industry-specific scope and direction of public cloud services spending today and over the next five years. The spending guides are delivered via pivot table format or custom query tool, allowing the user to easily extract meaningful information about each market by viewing data trends and relationships.
The 28 industries included in the IDC’s new industry taxonomy are: Consumer; Banking; Insurance; Capital Markets; Healthcare Payer; Healthcare Provider; Life Sciences; Telecommunications; Oil and Gas; Utilities; High Tech and Electronics; Aerospace and Defense; Automotive; Industrial and Other Manufacturing; Chemicals; Consumer Goods; Agriculture and Fishing; Mining; Retail; Software and Information Services; Travel and Transportation; Hospitality and Leisure; Media and Entertainment; Engineering, Construction, and Real Estate; Professional and Personal Services; Education; Federal/Central Government; State/Local Government.
About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world’s leading tech media, data, and marketing services company. To learn more about IDC in Europe, please visit https://www.idc.com/eu. Follow IDC Europe on X at @IDC EMEA and LinkedIn. Subscribe to the European IDC Blog for industry news and insights.