Summer heatwave could cost Europe's economy up to 180 billion euros

Europe's economy faces significant potential losses this summer, with a prolonged heatwave threatening to wipe out the entire year's economic growth. Bank forecasts indicate that the extreme temperatures could cost the region as much as 180 billion euros.

The economic damage is being channeled through four main areas. Reduced crop and milk yields, coupled with rising food prices, account for approximately 0.15% of the projected losses. Additionally, the efficiency of nuclear, hydroelectric, and thermal power plants is diminished, while solar panel output decreases and wholesale electricity prices rise, adding another 0.12% to 0.15% in economic losses.

Disruptions to railway, road, and inland waterway transport systems contribute further, causing an estimated 0.15% loss. However, the most significant and difficult-to-quantify impact is the reduction in labor productivity. Output begins to decline when temperatures exceed 25-30°C, with the most substantial drops occurring in outdoor and physically demanding jobs. Even office workers are affected, experiencing impaired sleep and cognitive abilities.

Research suggests that for every degree Celsius above 30°C sustained for several days, per-hour production can decrease by about 3%. The vulnerability of each economy is assessed based on the proportion of economic activity in heat-affected sectors, commuting times, air conditioning usage, and population adaptation. France is expected to bear the largest losses, with its economic growth potentially decreasing by 1.4 percentage points, possibly leading to a 0.6% economic contraction.