Brussels Economic Monitor 2/2026: Sovereign Software on the Rise?!

The European Technological Sovereignty Package combines two legislative proposals, one overarching strategy and one sectoral roadmap within an integrated framework for Europe’s digital sovereignty. The Chips Act 2.0 addresses external dependencies in semiconductor design and manufacturing amid rising demand for AI-related chips. It shifts from capacity expansion alone to an ecosystem approach, trying to strengthen Europe’s position across the value chain and aligning supply with demand from AI infrastructure, cloud services and high-performance computing. Faster permitting, coordination and targeted investments should reduce bottlenecks.

The Cloud and AI Development Act seeks to expand cloud and data centre capacity to enable large-scale AI deployment, combined with sustainability requirements, streamlined permitting and a harmonised framework for assessing cloud and AI sovereignty. The Open-Source Strategy is supposed to reduce vendor dependence by promoting interoperable solutions in cloud, AI and cybersecurity, while supporting skills and public sector adoption. The Strategic Roadmap for Digitalisation and AI in the Energy Sector links digital growth to energy constraints by integrating data centres into the energy system, ensuring clean energy access and improving grid efficiency through digital technologies and AI.

Forecast cumulative semiconductor investment by region

in billion euros, 2024-2032 

Key topics covered in the Brussels Economic Monitor 2/2026:

• Europe is a latecomer to the race for strategic technologies
• The US has 4.5 times the data centre capacity of the EU
• The Chips Act lacks the instruments to reach its targets
• Only one out of seven of the world’s top tech companies is based in the EU
• The pace of AI adoption varies significantly across the EU

TAKE: Overall, Europe has clear capability gaps in digital technologies that are increasingly shaping economic life. The EU is now responding by helping firms to grow and reducing the regulatory burden (EU Inc. and the Digital Omnibus), while also seeking to minimise critical dependencies. While these approaches can reinforce one another, they can also pull in different directions if not properly calibrated. The key challenge will be to strike a balance, asserting sovereignty where dependence is genuinely dangerous, while allowing businesses enough freedom to experiment with and implement advanced AI tools in their workflows. From an industrial policy perspective, the focus should be on promoting AI adoption in sectors in which Europe already excels, such as machine building and certain fields of advanced manufacturing. However, one thing is clear: in an increasingly hostile geopolitical environment, Europe's tendency to err on the side of caution − i.e. to regulate first and build later − is itself becoming a threat to sovereignty.

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• 3/2025: One year after Draghi’s wake-up call
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