Competing under pressure
HLB Survey of Business Leaders 2026 - European outlook
A complex European risk landscape
European leaders enter 2026 with measured optimism. Only 40% expect the rate of global growth to increase, around 1.5 times lower than the global average. This wariness stems from operating conditions that remain tough, testing both financial strength and long-term decision-making.
Cybersecurity, economic uncertainty, geopolitical risk and rising resource costs are the top risks to growth, which continue to frame the business environment . At the same time, inflation is also a risk for two-thirds of leaders in Europe. Several governments across the European Union are managing large fiscal deficits, elevated debt levels and rising financing costs. In this context, the prospect of higher taxation is becoming harder to dismiss. Geopolitical risk has remained a dominant concern for more than three years as the war in Ukraine continues, and new frictions emerge with the Trump administration over Greenland.
Trade dynamics
year on year rise in concern over trade flow disruption
Trade dynamics are also shifting. Despite the concern over trade flow disruption, reflecting the impacts of the new US tariffs, there are also signs of economic resilience. In 2025, the EU economy expanded by 1.4%, ahead of expectations. Poland and Spain led the bloc with growth of 3.2% and 2.9%, respectively, and are expected to remain above the EU average through 2026. The United Kingdom recorded GDP growth of 1.3% in 2025 and is forecast to maintain a similar pace next year.
Against this backdrop, corporate confidence has held up. Eighty-three per cent of European leaders are confident in their company’s growth prospects over the next twelve months. Fewer firms have seen profit margins decline compared with last year, and 23% report margin growth of 5% or more, underlining a degree of resilience that is shaping how Europe approaches the year ahead.
Three priorities for business leaders in 2026
In a volatile environment, European leaders are becoming more selective about where to act. The three priorities for 2026 point to a common agenda: move faster without losing control, invest in technology with purpose, and compete more effectively for the customer. Together, they signal a shift towards more intentional growth.
Making speed strategic
For many European businesses, a growing share of revenue now comes from products and services launched in recent years. In the third quarter of 2025, more than 20% of Renault vehicle sales were fully electric, reflecting strong uptake of recent launches. Ireland-headquartered Medtronic set a target for 20% of total revenue to come from products introduced in the previous 36 months. New insulin pumps and minimally invasive surgical tools are expected to account for at least a fifth of sales.
As product cycles shorten and customer expectations evolve, leaders are under pressure to accelerate planning and execution in tandem. Almost half of European leaders operate on continuous or short planning cycles under 24 months, while a similar share rely on cycles of three to five years or more. In volatile conditions, adaptive planning offers speed and flexibility. Yet without structure, it risks tipping into reactive decision-making.
European leaders are addressing this tension by pairing faster planning cycles with structured decision analysis. Centralised decision-making remains common, increasingly supported by options analysis and scenario planning. This combination allows organisations to adjust course without abandoning strategic coherence.
Profit Accelerators (those reporting a year-on-year profit margin increase from 5% or more) are 1.4 times more likely to use scenario planning, testing multiple futures before committing capital. In practice, scenario planning sharpens timing and capital allocation. For instance, Evonik Oxeno, a German chemical producer, evaluates 30 to 50 scenarios daily and has run nearly 10,000 simulations since launch. The outcome is a supply network that can absorb volatility while preserving continuity and selectively capturing upside.
Faster planning, however, only delivers results if execution keeps pace. This helps explain why improving operational efficiency remains the top priority for the next twelve months (56%). This focus is not new. Last year, 83% of European leaders said their operating models required improvement, particularly in processes and technology.
In 2026, more than a third of leaders plan to address weaknesses in digital and AI capabilities, followed closely by cost management, cybersecurity and operational effectiveness. In an environment where strategy must adjust quickly, lean execution is the necessary mechanism for turning intent into results.
Closing the digital gap
Competitive advantage is increasingly shaped by speed, with early movers able to lock in scale and operating leverage, particularly where network effects matter. European leaders recognise this dynamic and are seeking to strengthen their operating models through a combination of process improvement and targeted technology investment.
of leaders plan to adopt new technologies in the next twelve months
Europe’s approach to digitisation, however, remains distinctive. Compared with other regions, adoption has been more cautious, shaped by priorities around privacy, job preservation, and social equality
The European Union has consistently promoted a human-centred model of digitalisation, framing technology as a tool to serve society rather than disrupt it. While this stance underpins trust and legitimacy, it also introduces friction. Regulatory complexity can slow experimentation and extend the time it takes for innovation to translate into operating gains.
Nonetheless, some organisations have found ways to move decisively within these constraints. Over several years, ING has shifted from a branch-led model to a largely mobile-first, branch-light operation. Central to this transition has been a deliberate move away from on-premise infrastructure towards cloud services.
ING leaders are prioritising partnerships with major hyperscalers, including Google, treating these relationships as strategic collaborations rather than conventional vendor arrangements. The bank gains early access to selected platform features while contributing anonymised data to help improve underlying services. At the same time, the bank has taken a deliberately cautious stance on artificial intelligence.
Its initial focus has been on safe and responsible deployment, supported by a comprehensive risk framework. This is reflected in a governance model that tightly scopes AI initiatives to a small number of priority areas. By concentrating experimentation, the bank avoids fragmentation while still capturing meaningful productivity gains. According to ING’s leadership, introducing AI into operational processes has already delivered productivity improvements of around 25%.
Across Europe, leaders acknowledge the need to modernise digital infrastructure despite regulatory headwinds. In the next twelve months, 62% plan to increase investment in digital transformation and emerging technologies, rising to 74% among profit accelerators.
Preparation for responsible AI use is a growing priority as new regulatory frameworks come into force. As a result, European leaders are more likely than their global peers to avoid using AI. That said, more than a third of European companies already use AI for document processing and process automation. Profit Accelerators are also twice more likely to apply AI in research and development and 1.5 times more likely to use it in quality control.
In pharmaceuticals, for example, Novo Nordisk has entered a partnership with NVIDIA to accelerate drug discovery. The collaboration focuses on building tailored AI models to support early-stage research and clinical development, including advanced simulations to predict cellular responses and design drug-like molecules more efficiently.
However, strong digital ambitions heighten risk exposure. European leaders are more concerned about cybersecurity than their global peers, with 77% citing it as a major risk compared with 71% elsewhere. The vast majority of cyber incidents affecting EU organisations involve ransomware attacks or data breaches, both of which carry significant financial and regulatory consequences.
As digital systems become more interconnected, weak security increasingly acts as a binding constraint on growth. It limits how confidently organisations can deploy cloud platforms, scale AI applications, or share data across ecosystems. It follows that cybersecurity is the top weakness European leaders plan to address this year. Nearly six in ten expect to increase spending on data protection and cyber defence, rising to 67% among profit accelerators.
Weak security undermines confidence, limits data sharing and erodes trust at precisely the moment when customers expect seamless, personalised and reliable digital experiences. In this sense, security has become a foundation for loyalty and long-term growth, not merely a line of defence.
Rebuilding growth around the customer
A sharper focus on customers is another defining priority for European leaders heading into 2026. Consumer sentiment across the region remains mixed. Many households continue to rein in discretionary spending, particularly on non-essential purchases. Yet pockets of optimism are emerging, creating uneven but tangible opportunities for growth.
Confidence is improving in several markets. Consumer optimism in Poland has risen steadily month on month since the start of the year, reaching its highest level since the pandemic. In the United Kingdom, food inflation has eased over the past twelve months, potentially freeing up disposable income.
Market confidence
of profit accelerators plan to launch new products and services while continuing to build organic growth
Ambition is tempered by caution. With cost reduction still a priority, leaders are becoming more selective about where they place their bets. A major trend has involved customers more directly in new product development. Decathlon operates a dedicated co-creation platform where athletes and everyday customers contribute to surveys and product testing during development. The aim is straightforward: reduce missteps and improve product-market fit before launch. In financial services, Wise builds new offerings directly from customer demand signals, including decisions such as developing its multi-currency card.
Additionally, European leaders place greater emphasis on the human dimension of customer experience than their global peers. They are more likely to invest in employee training, organisational redesign and culture, rather than relying on digital tools alone.
With tighter budgets and greater access to low-cost alternatives, consumers have little patience for friction. Genesis survey found that half of European consumers say they would switch brands after two to five poor interactions, while nearly one in ten would do so after a single negative experience.
As a result, leaders are targeting customer experience as a system-wide issue rather than a front-end fix. “[Our goal this year is to] review and optimise every customer touchpoint from awareness and purchase through to after-sales service, eliminating friction points to enhance the overall fluidity and satisfaction of the experience, “ shared a CFO at a business services company. “We are actively working on how to reduce customer volatility. We have identified areas for improvement in this area, particularly in terms of balancing attention between acquiring new customers and retaining existing ones,” added another European leader.
In practice, this often means pursuing parallel investments across channels, like Nationwide, the UK-based mutual, recently did. The bank launched its “Branch Promise” to keep physical branches open, while simultaneously adding more than 30 new features to its mobile banking app and modernising core systems. AI tools were introduced to help employees deliver faster and more personalised service.
The results have been tangible. Nationwide has retained its position as the UK’s top-ranked provider for customer satisfaction for the thirteenth consecutive year, attracted a younger customer base and became the leading choice for first-time homebuyers. It has also captured a record share of new student bank accounts, signalling customer-driven market share gains.
By pursuing end-to-end transformations across people, process and technology, European leaders are working to strengthen customer relationships, build loyalty and secure incremental growth. In a price-sensitive market with plenty of choice, these efforts are becoming a key driver for growth.
How profit accelerators* stand out in Europe
European profit accelerators distinguish themselves less by bold bets than by consistent execution choices. Across planning, investment and risk management, their actions point to a more deliberate balance between speed, discipline and customer focus.
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More agile planning, tighter cost control. Profit accelerators are more nimble in how they plan. A majority, 55%, rely on continuous or short planning cycles of under 12 months, compared with 45% of their peers. They combine adaptive planning with structured scenario analysis to guide direction, while favouring slightly more centralised executive decision-making. The result is faster market adjustment without sacrificing coherence.
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Stronger growth intent alongside efficiency. Like the rest of the market, these firms continue to prioritise operational efficiency. However, they are more willing to fund growth in parallel. Profit accelerators are more likely to launch new products or services and much more likely to pursue organic growth, signalling greater confidence in demand and execution capacity.
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Further along the AI maturity curve. ‘Profit accelerators’ are more advanced in applying AI to core operations. They are 1.5 times more likely to use AI for process automation and to apply it in quality control and twice as likely to deploy it in research and development. These uses point to deeper integration rather than isolated experimentation.
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Higher sensitivity to technology and cyber risk. With greater digital exposure comes heightened risk awareness. Profit accelerators report stronger concern over cybersecurity and the broader impact of disruptive technologies. In response, they are more likely to invest in strengthening data and cyber defences and to increase spending on securing customer data over the next 12 months.
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A sharper focus on the customer. Compared with peers, profit accelerators place greater emphasis on customer experience. They are 1.5 times more likely to allocate additional funding to customer-focused initiatives this year, combining technology investments in segmentation and personalisation with training to strengthen frontline capabilities.
*Profit accelerators are those who reported increased profit margins by five per cent or more over the past 12 months.
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