Extreme heat could 'burn'
30180 billion off EU economy

Extreme heat, drought and widespread wildfires this summer threaten to shave roughly 1 percent off European Union GDP — a loss equivalent to about
30180 billion — according to an analysis by Triodos Bank. The calculation suggests the climate shocks already under way could wipe out most of the expected economic expansion across the bloc.

The European Commission currently projects about 1.1 percent growth for the EU in 2026. If the Triodos estimate materialises, the heat-related damage would effectively erase that forecast and leave the European economy close to stagnation.

How heat hits output and services

Most of the estimated economic cost stems from falling labour productivity when temperatures climb. Productivity begins to decline significantly once temperatures exceed 25 to 30 degrees Celsius, affecting not only outdoor and physically demanding jobs in construction, agriculture and heavy industry but also office work through disrupted sleep and impaired concentration.

The Triodos analysis finds that production per hour can fall by around 3 percent for each degree above 30 degrees Celsius when heat persists for multiple days. The same extreme conditions are already reducing agricultural yields and dairy production, adding upward pressure on food prices.

The energy sector is also strained: high temperatures and water shortages can limit output from hydropower as well as nuclear and thermal plants, while solar panels lose efficiency at very high temperatures. At the same time, greater use of air conditioning raises electricity demand, compounding supply pressures.

Low river levels are disrupting inland freight, and restrictions extend to road and rail links, increasing costs for companies and destabilising supply chains. France is among the large economies most affected: the analysis estimates extreme heat could shave about 1.4 percentage points off its growth, potentially pushing the country into a contraction of roughly 0.6 percent. Spain and Italy face many workers in heat-exposed sectors and frequent hot days, though long-term adaptation has partly reduced the toll. Poland is more vulnerable because air conditioning is less widespread, but this year has seen fewer extreme hot days and its economy is still expected to grow.

The human cost is not fully captured by the economic numbers: the analysis cites about 20,400 deaths linked to the June heatwave in France, Germany, Spain and Italy. Hundreds of thousands of hectares burned across Europe, inflicting further damage on agriculture, forests and ecosystems. Experts say better infrastructure, wider access to cooling, worker protections and improved water management can limit losses but will not eliminate them. El Niño could push another 49 million people into hunger.

Photo: press material from the event