Extreme heat could become a major drag on growth in Europe's largest economies, driven by falling labour productivity and rising demand for cooling, according to a new report by Allianz Trade.
By 2030, cumulative GDP losses could reach 5% to 7% in the countries most exposed to rising temperatures. France tops the European ranking, with potential losses of $240 billion (€209bn) over the next five years, according to Allianz.
Italy is the second-most exposed European economy, with projected losses of $147 billion (€128bn), followed by Germany at $131 billion (€114bn) and Spain at $120 billion (€104bn). By comparison, cumulative losses in Japan could reach $354 billion (€308bn).
To assess the potential economic cost, researchers assumed that countries would experience a steady rise in extreme heat between 2026 and 2030, culminating in conditions similar to their hottest year on record. This was based on the five hottest years each country recorded between 2014 and 2024.
The findings echo concerns raised by the European Central Bank. Speaking at the Climate, Nature and Monetary Policy Conference in Frankfurt in May, ECB Chief Economist Philip R. Lane said that "global warming and the increase in extreme weather events cause substantial economic damage".
