Extreme heatwaves in Western Europe and the accompanying drought could cost the EU economy €180 billion. The bloc's GDP could fall by 1%, which would mean economic stagnation in 2026, according to a report by Dutch bank Triodos Bank.
According to this analysis, the most significant impact on GDP growth will come from lower labor productivity. Analysts estimate the impact of this factor at 0.6% of EU GDP. The remaining impact will be caused by a combination of losses in agriculture, energy production, rising food prices and disruptions to transport, especially on inland waterways.
The losses will be unevenly distributed across EU countries. The French economy will suffer the most damage, with GDP forecast to fall by 0.6% for the year and economic growth to fall by 1.4 percentage points. The heatwave will also have a significant impact on the economies of Italy, Spain and Belgium. In contrast, the impact of the weather is expected to be weaker in Eastern Europe; in particular, Poland’s GDP could grow by almost 3% for the year.
“This summer shows that climate change is not a distant economic risk. The extreme heat we are experiencing today clearly shows how climate change is affecting lifestyles, workers and well-being in Europe. A loss of 1% of GDP this year would mean stagnation. This is real damage, although not catastrophic. "But this year's extreme heat is just a harbinger of what lies ahead if we do not act quickly and decisively on climate change," said Hans Stegemann, the bank's chief economist. On Monday, the Copernicus Earth Observatory (COPERNICUS) reported that temperatures in several western European countries in July were 3-5 degrees Celsius above average. In addition, June and July combined were the hottest months on record in the region, with an average daily temperature of 21.62 degrees Celsius, 2.79 degrees above the 1991-2020 average.