The Economic Impact of Heatwaves on Europe: GDP and Labor Productivity Declines

Europe, confronting a warming trend where its temperatures have risen at double the global average rate since the 1980s, faces a burgeoning economic threat from escalating heatwaves. Recent comprehensive analyses reveal that these extreme weather events are already inflicting substantial damage on the continent’s Gross Domestic Product (GDP) and diminishing labor productivity. Projections further indicate a sharp increase in financial losses across the region in the coming decades, underscoring a critical challenge to European economic stability.

• European temperatures have risen at double the global average rate since the 1980s.
• Heatwaves caused economic damages estimated at 0.3% to 0.5% of Europe’s GDP during four exceptionally hot years (2003, 2010, 2015, 2018).
• Projected average economic losses from heatwaves could exceed 1.14% of GDP by the 2060s without additional mitigation or adaptation measures.
• Ten additional days above 35°C in a year result in a 0.3% reduction in firms’ annual labor productivity across Europe.
• Southern European countries like Cyprus, Croatia, Portugal, Malta, Spain, and Romania are projected to face the highest economic losses, potentially exceeding 2.5% of their GDP by 2055–2064.
• Policy imperatives focus on both robust climate mitigation efforts and comprehensive adaptation measures, including workplace adjustments and urban greening.

Economic Impact on GDP

Studies consistently underscore the significant economic toll extracted by heatwaves across the European continent. Research published in Nature Communications, for instance, meticulously examined four exceptionally hot years—2003, 2010, 2015, and 2018. This analysis estimated total economic damages from heatwaves to range between 0.3% and 0.5% of Europe’s GDP, a figure encompassing the EU27 member states, the United Kingdom, and EFTA countries. This magnitude of loss represents a notable escalation, standing at 1.5 to 2.5 times the average annual economic losses from extreme heat observed during the 1981–2010 baseline period, which averaged approximately 0.2% of GDP.

Looking ahead, projections paint a stark picture of dramatically escalating losses, particularly if no additional mitigation or adaptation measures are implemented. Average economic losses attributable to heatwaves are anticipated to surge from the historical average of 0.21% of GDP (1981–2010) to 0.77% by 2035–2045, further rising to 0.96% in 2045–2055, and potentially exceeding 1.14% by the 2060s. The impact is far from uniform across the continent; Southern European countries such as Cyprus, Croatia, Portugal, Malta, Spain, and Romania are projected to endure the most severe economic losses, with some potentially reaching or exceeding 2.5% of their GDP by the 2055–2064 period. Greece, Italy, and France are also expected to face substantial declines. Conversely, nations like the UK, Ireland, Denmark, the Netherlands, and Belgium are forecast to experience relatively lower GDP impacts, generally remaining below 0.5% even in more severe future scenarios, though a consistent downward trend in economic performance is observed across most regions.

Labor Productivity Declines

Beyond the direct impact on GDP, high temperatures are also demonstrably eroding labor productivity across European economies. A comprehensive 2024 OECD report, leveraging extensive weather and financial data from over 2.7 million firms across 23 countries (21 in Europe, alongside Japan and South Korea) between 2000 and 2021, confirmed that both an increase in high-temperature days and the occurrence of heatwaves substantially reduce workforce output. Baseline estimates from this research indicate that ten additional days above 35°C in a year result in a 0.3% reduction in firms’ annual labor productivity. This detrimental effect is measurable even at lower temperature thresholds, with a 0.2% reduction observed for days above 30°C.

The adverse impact intensifies sharply with rising temperatures; days above 40°C can cut productivity by over 1.5%, potentially reaching up to 1.9%, with effects ranging from -1.1% to -2.7% in the most extreme scenarios. OECD simulations further highlight notable national disparities in productivity losses due to heat stress. Spain recorded the highest change, experiencing a 0.22% decline in labor productivity between recent periods (2000–2004 and 2017–2021). France and Hungary followed, each with a 0.13% loss, with Slovakia, Bulgaria, Slovenia, Italy, Poland, and Romania also seeing significant declines. Future simulations, premised on a 2°C temperature increase, project even steeper falls, with Spain’s labor productivity potentially dropping by over 0.8%, and Italy and Bulgaria by approximately 0.5%. In contrast, Northern European countries like Denmark and Finland are expected to face minimal losses, while the UK consistently shows the lowest productivity decline among Europe’s largest economies across various modeled scenarios.

Adaptation and Policy Imperatives

While some adaptation practices are already established in Europe, such as adjusting working hours for outdoor laborers during peak summer months and mandating breaks to mitigate heat stress, experts emphasize the urgent need for these practices to expand to more northern regions as heatwaves grow increasingly frequent and intense. The widespread implementation of localized early warning systems for extreme heat is also critical and requires broader adoption across Europe to protect vulnerable populations and economic activities.

Policy recommendations from leading economists and scientists converge on a strategic two-pronged approach. First, there is an urgent imperative to sustain and scale up robust climate mitigation efforts. These measures are essential for curbing the rising intensity and frequency of heatwaves, thereby addressing the root cause of the escalating economic damage. Second, adopting comprehensive adaptation measures is equally crucial. These include targeted interventions such as improving workplace ventilation, adjusting working hours to effectively avoid peak heat periods, and strategically expanding urban green spaces to lower ambient temperatures and mitigate the pervasive “heat island” effect. Beyond occupational health and safety, broader public policies are indispensable to support the design and implementation of localized adaptation plans, encompassing integrated urban and spatial planning measures that build resilience against future temperature extremes.