Extreme heat is becoming a major threat to Europe’s economy, disrupting industries that rely on outdoor work and exposing gaps in worker protection. 

“Excessive heat is a major risk for health and the economy in Europe, and it has significant macroeconomic and even fiscal implications,” Hans Martin Füssel, climate adaptation expert at the European Environment Agency (EEA), told EUobserver.

As wildfires continue to devastate parts of France and Spain, burning more than 42,000 and 80,000 hectares respectively, forcing more than 300,000 people to evacuate their homes, according to AFP, concerns are growing over the scale of the economic damage that heatwaves can inflict.

Europe’s latest heatwave has already pushed temperatures above 40°C in several countries, such as France or Spain, while strained healthcare systems contributed to thousands of excess deaths across Europe.  

“Heat stress is often called the silent killer,”said World Health Organisation chief Tedros Adhanom Ghebreyesus in a post on X. 

France could face the largest financial losses from summer’s extreme temperatures, with around $240bn [€211bn] through to 2030 in economic output at risk, an analysis by Allianz SE, Europe’s largest primary insurer estimated in a recently published heat-impact simulation. 

The simulation assessed more than 40 countries around the world and is based on estimated cost of heat waves between 2014 and 2024. Allianz conclusions shed light on Europe’s limits.

Since the 1980s, losses from climatological hazards in Europe have risen
with sharp peaks in 2021-2022. That year, total losses reached around €50bn.

Annual economic losses caused by weather-and climate-related extreme events in the EU Member States

Source: CATDAT, RiskLayer GmbH/European Environmental Agency.

At temperatures above a 30°C, people’s productivity threshold, agriculture and construction sectors are the two industries particularly affected when outdoor work slows, or crops are destroyed because of the extreme temperatures. 

“Compared with storms or floods, extreme heat less often shows up as direct damage,” notes the report.

And although France topped the ranking in absolute economic losses, Italy, Spain and Germany followed close behind.

The report estimated that the fiscal consequences will also affect France, Italy and Spain the most, as they are economies that are the “least able to absorb them”.

Olive crops down 28 percent

“A single day of extreme heat during flowering can destroy an entire harvest, even if the rest of the season is perfect,” said Italian agro-climatologist Marco Moriondo, speaking of olive crops. 

The Iberian Peninsula’s olive oil yield could decline by up to 28 percent, another study found. Spain is the largest producer of olive oil with the production of more than more than 50-percent of the world’s olive supply.

Italy and Germany came next in the “silent killer” prediction hit-list, with estimated losses of $147bn and $131bn, respectively, while Spain rounded out the top five, with around $120bn in potential losses.

France, Italy, Germany and Spain have the largest adaptation investment needs, in part due to their geographic and economic size.

The EEA cautioned that comparisons between countries depend on methodology. 

“As the EEA, we would not officially endorse that Germany or France is the ‘most’ affected country,” said Füssel.

Meanwhile, the Allianz analysis reflects a growing body of evidence that heat is no longer solely a public health challenge, but also an economic one.

“Extreme heat and heatwaves are structural hazards that pose risks across multiple sectors and the wider economy,” Arianna Giannetti, a climate expert at the EEA, told EUobserver.