BRUSSELS: Extreme heat and prolonged drought across Europe could erase much of the European Union’s projected economic growth in 2026, with losses estimated at around €180 billion ($208 billion), according to a report by Dutch lender Triodos Bank.
The report estimates that heat-related disruption could reduce EU gross domestic product (GDP) by about 1%, primarily due to lower labour productivity, declining agricultural output and disruptions to energy and transport infrastructure.
The warning comes as Europe experiences another summer of record temperatures, drought conditions and wildfires across several countries.
Heat Expected to Hit Productivity and Agriculture
According to Triodos Bank, losses in labour productivity alone could reduce EU GDP by around 0.6%, while agricultural production could decline by 3% to 7% because of prolonged heat and water shortages.
The report also warned that higher food prices, reduced electricity generation, rising power costs and disruptions to road, rail and inland waterway transport could further increase the economic impact of extreme weather.
France is expected to face the largest economic losses, with recurring heatwaves projected to reduce its GDP by around 1.4%, potentially pushing the country’s economy into an annual contraction of 0.6%.
EU Growth Outlook Faces Rising Climate Risks
The report said Italy, Spain and Belgium are also expected to experience significant economic losses, while countries such as Poland may be less affected due to fewer exceptionally hot days.
The findings come as the European Commission forecasts 1.1% GDP growth for the European Union in 2026, while the International Monetary Fund (IMF) projects 0.9% growth for the euro area.
Triodos Bank said the increasing frequency and intensity of extreme weather events underscore the growing economic risks posed by climate change, particularly through lower productivity and pressure on food and energy systems.