Many European countries, including France, Germany, Switzerland, Spain and Italy, have recently issued red weather warnings as a new round of extreme heat waves hits. Some European countries are closing schools and advising residents and tourists to travel less in response to the intense heatwave, the Guardian reported Tuesday. Meanwhile, key sectors such as energy, agriculture, tourism and the labour market have also been hit. Economists are concerned that the prolonged extreme heat will cause huge economic losses in some European countries and further drag on growth.
Which countries will be most affected?
“Extreme heat in Europe: which countries face the greatest cost?” Euronews reported recently under this headline that estimates from“Allianz Trade” show that, the extreme heat could be a major drag on growth in Europe, driven by falling productivity and increased demand for cooling. By 2030, persistent extreme heat is expected to reduce economic output in some countries by as much as 7 percent.
To assess the potential economic costs, the researchers assumed that countries would continue to experience extreme heat between 2026 and 2030. The figures show that France will be the most affected country in Europe, with a cost of €209bn over the next five years, while Italy is expected to lose €128bn Germany and Spain will lose $114 billion and $104 billion respectively.
The effects include shorter working hours for urban workers such as construction workers, factory workers and couriers, as well as farmers on farms. Businesses are also facing rising cooling costs. It is estimated that for every 1 °C rise in temperature above 30 °C, labour productivity falls by 3 per cent, while the extra energy demand of businesses and households increases by 1.2 per cent. In addition, high temperatures put a huge strain on electricity, leading to higher prices.
Local people are feeling the economic damage
“Factory closures, farm closures, train outages. . . record high temperatures have had a serious impact on the region,” French newspaper les echos reported, the agriculture sector needs to protect livestock from heat-induced fire risks, for example by adjusting the way cows are fed and milk collected; fruit growers need to maintain moisture in their fruit as they cope with heat and drought; and farmers need to protect their crops from drought Railways are also under pressure, with air-conditioning systems on high-speed trains often struggling to cope with temperatures in excess of 40C.
The“Economic damage” of the heat is also being felt in Germany. Christian, who owns a restaurant in Berlin, told the global times that despite the World Cup and live matches, but the hot weather has caused the restaurant to suffer a sharp drop in customers and sales. Customers order mostly cold, light dishes, and orders for desserts have plummeted.
For many ordinary people, the cost of living is also rising. Katia, who lives in Munich, told reporters that water consumption has increased by 30% in the past month, electricity bills have more than doubled, and many families have canceled their summer travel plans.
The extreme heat this year is making Spain’s tourism industry more differentiated than usual from June to August, the country’s peak tourist season. According to Spanish economic newspaper Economia 3, the coastal destinations are still crowded with tourists, but some inland cities have seen a significant drop in activity due to the high temperatures. In addition, many outdoor events have to be rescheduled or heat-resistant to ensure the safety of participants. This brings additional costs to event organizers and local governments.
Countries not ‘fully prepared’
While many countries are aware that heat can be an“Economic killer”, the Allianz study found that none of Europe’s major economies are adequately prepared for the economic consequences of extreme heat.
When it comes to worker protections, Spain has arguably done relatively well; when it comes to building heat-resistance standards, France leads the way. But the report concludes that no European country has built a comprehensive safety net for workers, buildings, public finances and vulnerable households. While most European countries have developed climate adaptation strategies, few have committed to long-term financial support. Instead, governments often rely on emergency spending after a heatwave.
The EU has pledged in its“Fit for 55” package to cut greenhouse gas emissions by at least 55% by 2030 and aim to be climate neutral by 2050, Euronews said. Brussels sees the transition as not only helping to combat climate change, but also strengthening the EU economy by reducing its dependence on fossil fuels and making it more resilient to climate-related risks.
Allianz believes households also have an important role to play in coping with high temperatures. European households hold almost €40,000 bn in financial assets, but many residential facilities can not cope with extreme heat. Incentives could help mitigate the effects of extreme heat. However, low-income households are often the most vulnerable to high temperatures and may not be able to afford to upgrade their homes. That means government support is still needed to ensure that efforts do not exacerbate social inequality.