- Extreme heat could reduce EU GDP by around 1% in 2026, equal to approximately €180 billion in economic damage.
- Lower labour productivity is likely to have the largest economic impact, alongside disruptions to agriculture, energy and transport.
- France is expected to be hit hardest; economic growth in the Netherlands could be almost entirely erased.
- While adaptation can limit some damage, stronger climate mitigation remains essential to prevent even greater damage going forward.
Triodos Bank’s report, Hot Summer Economics, highlights the substantial human and ecological costs, including heat-related deaths, pressure on healthcare systems and severe wildfire damage of this year’s exceptional heat and drought in Europe. The bank then quantifies the economic impact of extreme heat through four areas: food and agriculture, energy production, transport and logistics, and labour productivity.
A loss of labour productivity is the largest and most firmly established economic effect of this summer’s extreme heat. Triodos Bank estimates an average labour-productivity loss of around 0.6% of EU GDP. Agricultural losses (with EU agricultural output expected to fall by 3–7%) and higher food prices, constrained power generation and higher electricity prices, and disruption to roads, rail and inland waterways add to the damage.
“This summer shows that climate change is not a distant economic risk. The extreme heat we all experience today shows concretely how climate change will affect lives, workers and prosperity across Europe,” says Hans Stegeman, chief economist at Triodos Bank. “For this year, the loss of 1% of GDP would mean stagnation. That is a real cost, but no catastrophe. Yet the extreme heat this year is just a taster of what’s coming if we do not act quickly and forcefully on climate change. The most powerful thing we can do to lower these costs is to mitigate climate change. That means changing our lifestyles and transforming our economies so that we use less energy and resources.”
France to be hit the hardest
The impact differs significantly by country. France could see GDP growth reduced by 1.4 percentage points, potentially resulting in a 0.6% contraction. Italy, Spain and to a lesser extent Belgium also face substantial losses. In the Netherlands, an estimated 0.8 percentage-point reduction in GDP-growth would leave the economy broadly stagnant, while Poland is less affected because it is estimated to experience fewer exceptionally hot days.
Adaptation is not enough
Triodos Bank calls for adaptation measures, such as better-insulated buildings, climate-resilient infrastructure, adjusted working hours and more equitable access to cooling. However, adaptation can only reduce part of the loss. The only thing that can prevent costs is forceful mitigation of climate change. The bank urges policymakers to combine rapid decarbonisation with demand-side policies that moderate total energy and material use, avoiding a vicious cycle in which climate damage weakens growth and climate policy is then relaxed in response.