The water is so low in Rome\u2019s Tiber River that the remains of Nero\u2019s Bridge have broken the surface. Along the Danube in Budapest, the \u201cRock of Starvation,\u201d so named because its exposure signals dangerously low water levels and probable crop failure, has surfaced in its entirety. In France, Spain and Italy, heat stress and the record-breaking drought have sent milk, eggs and cereals output plummeting. Wildfires in Spain, France, Portugal and elsewhere on the parched continent have torched hundreds of thousands of hectares. <\/p>\n
The average citizen in Europe is suffering from the extreme temperatures, which have reached the low-40s C in some regions and have proved relentless. June and July in Western Europe were the warmest on record, according to Copernicus, the European Union\u2019s climate observation service, and the temperatures by mid-August had barely dropped.<\/p>\n
To add to Europeans\u2019 misery, they soon will be suffering from a new supply shock that stands to push up inflation and interest rates, push down growth rates and raise industrial costs. For decades, climate change was broadly defined as an environmental problem; today, in Europe, the fastest-warming continent, it is becoming an economic and business problem, too. <\/p>\n
Open this photo in gallery:<\/a><\/p>\n The ruins of the ancient Roman Neronian bridge, emerge from the riverbed of the Tiber river due to drought, in Rome, Aug. 13.Gregorio Borgia\/The Associated Press<\/p>\n The Dutch bank Triodos, which finances environmentally friendly projects, said in its new \u201cHot Summer Economics\u201d report that the extreme heat could erase most or all of the EU\u2019s forecast growth this year. \u201cThe main ways in which heat affects EU GDP are lower agricultural output and higher food prices, constrained energy production and increased transportation costs, and reduced labour productivity,\u201d the report said. <\/p>\n Danube River sinks to record low as drought and heat grip Europe<\/a><\/p>\n Triodos estimated that the EU-wide impact could reduce growth by a full 1 per cent. While the figure seems minor, it\u2019s enough to flatline the economy and possibly push it into a shallow, technical recession if the drought and heat wave persist. Before the heat wave hit, the European Commission had expected EU growth of 1.1 per cent in 2026; the International Monetary Fund had forecast 0.9 per cent. <\/p>\n The summer of 2026 has been hotter for longer. While temperatures in previous summers have spiked, they rarely remained this high for more than a few days. This summer has been sweltering since June.<\/p>\n Take Italy. Triodos noted that in the year to the end of July, the country had 53 \u201chot\u201d days, defined as those at 30 C or greater. Based on the records of previous temperatures, the firm expects a total of 96 hot days in 2026, an excess of 47 days more than the long-term average. Spain and France are expected to have 33 and 41 excess hot days, respectively. The heat is being primarily blamed on a persistent, high-pressure \u201cheat dome\u201d that is exporting savage temperatures from North Africa, not El Nino \u2013 the periodic, naturally warming sea temperatures in the tropical Pacific Ocean that developed in June.<\/p>\n Open this photo in gallery:<\/a><\/p>\n Firefighters try to hose down hotspots in the aftermath of a wildfire in Collserola, near Barcelona, Spain, August 14.Bruna Casas\/Reuters<\/p>\n The main victims of the European heat waves have been workers\u2019 productivity and water availability. <\/p>\n Simply put, when it\u2019s hot and you don\u2019t have air conditioning \u2013 AC in Europe is relatively rare compared with North America \u2013 you don\u2019t want to break a sweat. According to Germany\u2019s Allianz, the world\u2019s largest insurance company, a worker\u2019s output an hour falls 3 per cent when temperatures hit 30 C or more. <\/p>\n For the broader economy, the water levels are the biggest immediate threat. The levels in rivers and lakes, especially in the main rivers that are crucial transportation corridors, are falling everywhere. The efficiency of the agriculture, energy and transportation is driven by water availability.<\/p>\n