- by Graham Holton
- The Guardian
- Issue #2200
The 2026 European heatwave is on track to exceed Europe’s previous heat events. While much has been said in the media about the human costs of the current heatwave, little attention has been made on the resultant economic losses’ worth tens of billions of euros.
The heatwave has forced up food prices, increased imports, reduced farm incomes, and placed greater pressure on food security. With temperatures approaching 42°C, extreme heat has reduced workers’ ability to work safely and efficiently, increasing labour costs. Productivity has fallen in construction, manufacturing, logistics, transport, and tourism. Increased electricity demand and reduced hydropower generation has forced up energy costs.
The worst-hit economic sector is agriculture. France Spain, Hungary, Italy, and Romania have lost more than 9 million tons of grain and crops worth almost AU$2 billion. Livestock has had reduced milk yields, lower fertility and low weight gains. Agriculture also faces transport costs as low water levels affect river transport, and railways have speed restrictions because the metal rails expanded in the extreme heat.
Major European rivers are experiencing exceptionally low water levels, impacting transport. Wildfire damage has cost billions of euros, with more than 12,500 in France alone, forcing tens of thousands of people to evacuate. Forest firefighting has cost hundreds of millions of euros. Tourism has been reduced causing a big hit on resorts and hotels. Railways have speed restrictions because the metal rails expanded in the extreme heat.
France is the hardest hit economically, with losses worth up to $2 billion. Farmers have reduced harvests for wheat, maize and sunflower, along with lower milk production, and higher irrigation and feed costs. The impact on the national health system includes increased emergency care, hospital admissions, ambulance services, long-term treatment, and lost productivity from illness and premature deaths. All have a major economic cost.
Germany’s economy has taken a $36 billion pounding in reduced industrial output and losses from agriculture. The heatwave has increased electricity demand for cooling, and reduced the efficiency of thermal power stations, forcing increased electricity prices for businesses and households. Industrial output is way down. In agriculture 1.4 million tonnes of grain, worth €233 million, was lost. The Rhine is critical for Germany’s heavy industry. Low water levels have restricted transport and freight supply chains.
Spain, already hot and dry, is severely affected. Economists and insurers estimate that the total economic cost to Spain is likely to be almost $20 billion, with the greatest impacts falling on agriculture, labour productivity, tourism, water resources and healthcare. Coastal resort operators face substantially higher operating costs. Spain has experienced one of the largest agricultural losses in Europe, contributing substantially to the continent-wide grain shortfall.
Temperatures regularly over 40°C reduce working hours and productivity, accounting for several billion euros lost. Water shortages have severely affected farming, manufacturing and tourism. The costs of emergency response and post-fire recovery amount to hundreds of millions of euros. Health impacts reduced economic output through lost working days and premature mortality.
The case of Spain highlights the significant economic challenges that increasingly frequent and intense heatwaves pose for other Mediterranean economies, such as Italy and Greece.
Eastern Europe has suffered major economic losses from the heat wave. The region’s economy is heavily dependent on agriculture, river transport and manufacturing, making it particularly vulnerable to prolonged heat and drought. Across Eastern Europe, the heatwave is expected to cause over $30 billion in economic losses.
Eastern Europe contributes significantly to Western Europe’s grain shortfall. Romania, one of Europe’s largest grain exporters, has had poor harvests with domestic and international economic effects. Reduced harvests of wheat, maize and sunflower have increased food prices across the region.
If these heatwaves continue as expected, cumulative losses could reach more than $1,000 billion across Europe’s largest economies by 2030. Insurers and economists now regard extreme heat as a structural economic risk rather than an occasional disaster.
It’s way past time for European nations to take climate change seriously.
