Heatwaves threaten Europe’s economy with losses of up to €180 billion

Monday 10 August 2026 - 16:15

By: Azzat Manal

Heatwaves threaten Europe’s economy with losses of up to €180 billion

Europe’s increasingly intense heatwaves are emerging as an economic threat, with extreme temperatures and drought putting pressure on productivity, agriculture and overall economic growth.

A report by Dutch sustainable finance bank Triodos estimates that climate-related disruptions could cost the European Union around €180 billion, equivalent to approximately $208 billion. The impact could reduce EU economic output by about 1%, at a time when growth is already relatively weak.

Lower worker productivity is expected to be one of the main sources of economic losses. According to the report, extreme heat could reduce overall economic output by around 0.6% as high temperatures make it more difficult for workers to maintain normal productivity.

Agriculture is also facing significant risks. Drought and water shortages could reduce agricultural production across the European Union by between 3% and 7%, potentially increasing food prices and putting additional pressure on supply chains.

France is among the economies considered particularly vulnerable. The Triodos analysis estimates that repeated heatwaves could reduce French economic output by around 1.4%, while some scenarios point to an annual contraction of up to 0.6%.

The warnings come as European growth forecasts remain modest. The European Commission expects the EU economy to expand by around 1.1%, while the International Monetary Fund projects growth of approximately 0.9% for the euro area.

The latest estimates highlight how extreme weather is increasingly becoming an economic issue as well as an environmental one. If heatwaves and droughts become more frequent or last longer, their impact could increasingly weigh on Europe’s productivity, food production and economic growth.