The prolonged heat waves and droughts that have engulfed Europe this summer are becoming a major economic problem, with consequences affecting energy, agriculture, transport, public health and tourism.
Record temperatures in June and July, coupled with drought and widespread wildfires, have caused damage that economists estimate is in the hundreds of billions of euros. The main warning is that the cost will not be limited to 2026, but could increase in the coming years.
According to experts cited by Reuters, the combination of several extreme phenomena in the same areas – heat waves, droughts and fires – is creating a knock-on effect on the economy.
Energy and transportation problems
Low water levels have limited the transport of goods on the **Rhine** and **Danube** rivers, two of the main transport arteries in Europe.
The energy sector has also been affected. More than six nuclear reactors in Romania and Hungary have reduced or suspended production due to difficulties with cooling systems.
In agriculture, extreme temperatures have damaged crops, with losses reported in July for crops such as corn and sunflowers reaching around 6–7%.
The heat is also directly affecting worker productivity and public health. Germany alone has reported more than 10 deaths related to high temperatures.
Blow to European economies
According to ING, disruptions on the Rhine River could cost Germany around 0.3 percentage points of GDP by 2026.
Meanwhile, the National Bank of Hungary estimates that every week that the country's largest nuclear power plant remains out of operation could reduce economic growth by around **0.1 percentage points.
Allianz has estimated that just the two-week heat wave in June could reduce European GDP by about 0.3 percentage points.
Experts warn that these figures may only be a fraction of the true bill, as they do not fully include damage from fires, droughts and floods.
Southern Europe faces the biggest blow
Spain, Italy and France are among the countries expected to face the most severe consequences due to higher temperatures.
Another sector at risk is tourism. Temperatures reaching extreme levels during the summer months could make traditional Mediterranean destinations less attractive to tourists.
Economists predict that some tourists may shift towards Northern Europe, while southern countries may try to attract more visitors during the spring and autumn.
Food can get expensive.
Extreme heat is also putting pressure on food prices. Warmer regions are particularly exposed to price increases due to damage to agricultural production.
A study cited by experts estimates that the 2022 heat wave increased inflation in the eurozone by about **0.34 percentage points**, mainly through food.
This poses an additional challenge for the European Central Bank, which must balance the fight against inflation with the need to support an economy that is facing successive shocks.
Damage can become greater over time
One of the most worrying aspects is that the economic consequences of a heat wave do not necessarily end when temperatures drop.
Crop damage, production disruptions, infrastructure damage, and supply chain disruptions could continue to impact the economy for months or years.
With the eurozone expected to grow by only about 1% this year, economists warn that climate shocks are coming at a particularly difficult time.
Climate change is no longer seen as just a problem of the future. For the European economy, the bill for extreme temperatures is already starting to be paid.
