<\/p>\n
Europe\u2019s status as the planet\u2019s fastest-warming continent is becoming a serious drag on its economic prospects.<\/p>\n
The region, where temperatures are rising at a pace that\u2019s roughly twice the global average, can no longer afford to ignore the economic impact of global warming, according to economists interviewed by Bloomberg.<\/p>\n
They say governments will need to invest billions of euros in the years ahead to protect citizens from increasingly dangerous heat waves that are already cutting productivity, hurting industry and resulting in significant numbers of deaths.<\/p>\n
This summer\u2019s heat waves should be a \u201cwake-up call for all European policymakers\u201d, Carsten Brzeski, global head of macro at ING Group NV, said in an interview. The temperature extremes have \u201creally gripped all of Europe\u201d.<\/p>\n
The economist, who spends most of his time forecasting key macro-economic measures such as inflation and gross domestic product, says the thermometer has now \u201cbecome a leading indicator\u201d that people like him need to track.<\/p>\n
Read: Scientists confirm 2025 was third-hottest year, trailing 2024 and 2023<\/p>\n
The European Commission this year estimated that EU member states should be spending close to \u20ac70 billion ($80 billion) each year through 2050 to adapt to the fallout from rising temperatures.<\/p>\n
Allianz SE, Europe\u2019s largest primary insurer, recently published heat-impact simulations showing that Germany, the biggest EU economy, faces economic losses through 2030 of about $130 billion. For France, the amount is $240 billion.<\/p>\n<\/p>\n
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The Allianz figures, which are extrapolations based on the estimated cost of heat waves between 2014 and 2024, surprised the economists doing the analysis, says Hazem Krichene, a senior economist on climate at Allianz.<\/p>\n
They knew there\u2019d be an economic impact, but Krichene says he and his team \u201cdidn\u2019t expect it to be so huge\u201d.<\/p>\n
Europe\u2019s housing and infrastructure is mostly built to shield it from the effects of cold weather. But increasingly, for a few months every year, that infrastructure needs to be able to withstand extreme heat too.<\/p>\n
Read: Europe\u2019s heat wave is the worst on record, researchers find<\/p>\n
Fabric and wooden shutters shield a home during hot weather in Palma de Mallorca, Spain. Image: Andrey Rudakov\/Bloomberg<\/p>\n
\u201cIn two or three decades, you have this very rapid shift\u201d in temperatures, Krichene said. \u201cAnd you end up having urban infrastructure which is not very well adapted to heat.\u201d<\/p>\n
Heat creates a feedback loop in which expected returns on capital decline, investments fall and productive capacity is reduced, Allianz\u2019s research found.<\/p>\n
That leads to a stagflationary environment, which can quickly become a nightmare for policymakers trying to maintain stability in Europe\u2019s biggest economies.<\/p>\n<\/p>\n
\u201cWhat we show in our analysis is that if you do nothing you will have a fiscal cost,\u201d Krichene said. \u201cThe awareness is there, but how to materialise this into concrete action, this is what we\u2019ll see in coming months.\u201d<\/p>\n
Part of the challenge in Europe is that northern countries with colder climates will face more benign economic trajectories as temperatures rise, while the region\u2019s biggest economies \u2013 Germany, France, Italy and Spain \u2013 risk meaningful economic setbacks, Allianz\u2019s analysis found.<\/p>\n
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Inside the euro zone, which spans from Finland to Greece, that poses an \u201cacute\u201d dilemma for the European Central Bank, it said.<\/p>\n
Read: Germany\u2019s Autobahn cracks after heat wave hits Europe<\/p>\n
Brzeski notes that the ECB has already published estimates showing that heat waves and drought could push up food inflation by some 0.4 to 0.9 percentage points, an effect that has the potential to double over the next 30 years.<\/p>\n
And an analysis of the summer of 2025, co-authored by the ECB, shows that the European economy lost 0.3% of output, a figure that could swell to an accumulated 0.8% by 2029.<\/p>\n
In the UK, the latest heat waves have exposed major shortcomings in the country\u2019s infrastructure. London Mayor Sadiq Khan said in June the city will need to turn to private investors to help fund the cost of rising temperatures.<\/p>\n
Just protecting the most vulnerable London homes from extreme heat will cost somewhere between \u00a39 billion and \u00a345 billion, Khan said.<\/p>\n
Commuters during heat wave conditions in the City of London. Image: Jose Sarmento Matos\/Bloomberg<\/p>\n
The UK\u2019s June heat wave cost an estimated \u00a32.36 billion, according to Verdant, a London think tank. Its calculation takes into account reduced productivity, as higher temperatures make it harder to work and result in heat-induced failures in infrastructure and equipment.<\/p>\n
The ferocity of the latest heat waves is even forcing some of Europe\u2019s traditional climate skeptics to backtrack. France\u2019s Rassamblement National, whose leader and presidential candidate Marine Le Pen once dismissed a UN-backed IPCC climate report as \u201cvery, very alarmist\u201d, has since acknowledged the need to take such science seriously.<\/p>\n
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Read: London heat wave triggers school closures and flash flooding<\/p>\n
\u201cWe need to have the capacity to react, because we\u2019ve had reports for a long time, specifically those from the IPCC, that talk about global warming,\u201d S\u00e9bastien Chenu, a lawmaker for the party, told French broadcaster TF1. \u201cThat really strikes me.\u201d<\/p>\n
Last year, France spent \u20ac1.7 billion on climate adaptation, according to an analysis by the Institute for Climate Economics in Paris. The figure doesn\u2019t take into account the tens of billions of euros spent on heat-related upgrades of transport infrastructure and energy systems, as well as public health policy and civil protection resources.<\/p>\n
Vivian Depoues, the institute\u2019s research lead on adaptation to climate change, says the resources exist to tackle the challenges ahead.<\/p>\n
\u201cWe have all the tools and technical knowledge to do it,\u201d he said. It\u2019s \u201cmuch more about how we prioritize objectives.\u201d<\/p>\n
Read: France nears disbursement of second climate loan to SA<\/p>\n
The cost of inaction, meanwhile, is more than just economic. So far this summer, heat waves have already killed more than 13 000 people in Europe, according to estimates published by national authorities.<\/p>\n
ING\u2019s Brzeski says what Europe is going through now should be \u201cthe wake-up heat wave\u201d. It should convince everyone that \u201cclimate change is for real\u201d, he said.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Heat #morphs #major #economic #shock #unprepared #Europe<\/p>\n","protected":false},"excerpt":{"rendered":"
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