Entrepreneurs shift from ambition to execution as cost pressures and regulation intensify, EY survey finds

• 76% of entrepreneurs report using AI and machine learning 

• 55% plan to invest in IT systems and software upgrades 

• 63% cite regulatory complexity as the main barrier to growth 

• Talent shortages continue to constrain hiring and expansion 

The second edition of the EY Entrepreneurship Barometer 2026 shows that entrepreneurs across wider Europe are shifting from strategic ambition to disciplined execution as they navigate a complex environment shaped by rising costs, regulatory pressure and macroeconomic uncertainty. 

Based on insights from 1,009 entrepreneurs, the study highlights how these conditions are reshaping investment priorities, innovation strategies, technology adoption and workforce planning — with a growing focus on operational discipline and resilience.

Shift from intent to execution accelerates

Entrepreneurs are increasingly prioritizing execution over expansion. While innovation intent remains high, it is largely incremental and operationally focused.

More than half of respondents (56%) prioritize product innovation, while 46% focus on process and organizational improvements, highlighting a strong emphasis on execution readiness alongside growth. Only 7% report having no innovation plans.

This shift is reflected in investment behavior. Over half (55%) plan to invest in IT systems and software upgrades, and 45% in process automation. In contrast, 11% report no planned investment, pointing to a selective, optimization-led approach rather than aggressive expansion.

AI adoption scales, but value realization remains uneven

Artificial intelligence (AI) is now widely adopted, with 76% of entrepreneurs reporting use of AI and machine learning, making it the most prevalent digital technology in the region. Data analytics adoption stands at 66%, followed by cloud computing at 53%.

Investment in AI continues to accelerate, with 75% of entrepreneurs having invested in AI over the past three years. However, translating adoption into value remains a challenge. While 60% report efficiency gains and 51% report cost savings, only 38% say AI has delivered revenue growth benefits to date.

Non‑technical barriers are increasingly constraining value realization, including data privacy concerns (53%), regulatory uncertainty (45%) and intellectual property risks (36%).

Entrepreneurs face sustained pressure from costs and regulation

Entrepreneurs across wider Europe continue to operate in a high-pressure environment. Bureaucracy and regulatory complexity are cited by 63% as the most significant barrier to entrepreneurship, while 41% point to political and economic instability as a major constraint on growth.

Cost pressures remain a defining challenge. Eighty percent of respondents expect higher labor costs to negatively affect their financial security in the next 12 months. This is closely followed by rising operating costs (79%), inflationary pressures (74%) and geopolitical instability (74%).

Talent shortages continue to constrain growth

Despite ongoing digital transformation, talent scarcity remains a key constraint on growth. Nearly two-thirds of entrepreneurs (63%) report difficulty finding candidates with the required skills, while 50% cite a lack of job-ready experience as a major hiring challenge.

Compensation pressures are also rising, with 29% of respondents identifying pay and benefits as an increasing constraint.

Hiring intentions are moderating, with 43% planning to increase full-time headcount over the next 12 months, while 35% expect to maintain current levels. At the same time, reliance on flexible talent is increasing, with 22% planning to engage freelancers or contractors.