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Identifying drought indices that effectively predict future drought impacts remains a critical challenge in seasonal forecasting, as these indices provide the necessary actionable information that enables stakeholders to better anticipate and respond to drought-related challenges. This study evaluates how drought indices balance forecast skill and relevance for estimating impacts across Europe. Using European Centre for Medium-Range Weather Forecasts SEAS5 seasonal predictions and ERA5 reanalysis as benchmarks, we assessed the predictability skill of drought indices over various accumulation periods and their relevance in estimating drought impacts across Europe, with the aim of enhancing impact-based forecasting. To evaluate these relationships, we built upon the findings from a study that utilized drought impact data from the European Drought Impact Report Inventory and employed random forest models to evaluate the significance of various drought indices in predicting sector-specific impacts. Our findings reveal higher predictability in Northern and Southern Europe, particularly during winter and summer, with some regions showing extended predictability up to six months, depending on the season. Focusing on case studies in the UK and Germany, our results highlight regions and seasons where accurate impact predictions are possible. In both countries, high impact predictability was found up to six months ahead, with sectors such as Agriculture, Water Supply, and Tourism in the UK, and Agriculture and Water Transportation in Germany, depending on the region and season. This analysis represents a significant step forward in identifying the most suitable drought indices for predicting impacts across Europe. Our approach not only introduces a new method for evaluating the relationship between drought indices and impacts, but also addresses the challenge of selecting indices for estimating impacts. This framework advances the development of operational impact-based drought forecasting systems for Europe.