Experts Warn Heatwaves Threaten Europe’s Largest Economies

Europe’s intensifying heatwaves could impose enormous economic costs on the continent, as rising temperatures reduce productivity, disrupt industry and increase pressure on public finances.

Europe is warming at roughly twice the global average, leaving some of its largest economies increasingly exposed to extreme heat, according to a Bloomberg analysis cited by the Spanish newspaper La Vanguardia.

Economists warned that governments could be forced to spend tens of billions of euros on adapting infrastructure, workplaces and cities to hotter conditions.

Carsten Brzeski, an economist at ING, described the latest summer heatwaves as a warning for policymakers. He said temperature patterns were becoming an important indicator for assessing Europe’s economic outlook alongside inflation and gross domestic product.

European Commission estimates suggest EU countries may need to spend about €70 billion annually until 2050 to adapt to climate change.

Insurance group Allianz has forecast losses of around $130 billion for Germany and $240 billion for France by 2030.

Hazem Krichene, chief climate economist at Allianz, said the scale of the projected losses surprised researchers despite their awareness of the growing threat.

Many European cities were designed to withstand cold winters rather than prolonged periods of extreme summer heat, leaving buildings, transport networks and public services poorly equipped for repeated temperature surges.

The economic effects could create a cycle of weaker investment returns, declining productivity, rising prices and slower growth.

The impact is also expected to vary considerably across Europe. Cooler northern countries may face less severe damage, while Germany, France, Italy, Spain and other southern or central economies could suffer greater losses.

Such differences could complicate European Central Bank policy, as heat-driven inflation and weaker output may affect member states unevenly.

The European Central Bank estimates that extreme heat could reduce Europe’s economic output by 0.8% by 2029. It also expects the effect of rising temperatures on food inflation to triple over the coming decades.