This summer's extreme weather is expected to wipe out all economic growth in 2026.

Summer's extreme drought and record-high temperatures could mean that the economic growth the EU seemed to expect in 2026 will be completely wiped out. In a new analysis of the summer's extreme weather, the Dutch bank Triodos Bank has examined the costs associated with the extremely hot and dry weather, and the bill currently appears to amount to approximately 180 billion euros, which is equivalent to the growth expected throughout the year. "This summer shows that climate change is not a distant economic risk. The extreme heat we all experience today demonstrates concretely how climate change will affect people's lives, workers, and prosperity across Europe," says Hans Stegeman, chief economist at Triodos Bank, in a press release. "This year, a loss of 1 percent of GDP will mean stagnation. It is a real cost, but not a catastrophe. Nevertheless, the extreme heat this year is just a preview of what awaits us if we do not act quickly and decisively against climate change. The most effective thing we can do to reduce these costs is to mitigate climate change. This means we need to change our lifestyles and transform our economies so that we use less energy and fewer resources," he elaborates. Decline in productivity and yields The largest bill comes from a decline in productivity. Triodos Bank estimates a decrease in labor productivity equivalent to about 0.6 percent of the EU's GDP. Losses in agriculture—where EU agricultural production is expected to fall by 3-7 percent—higher food prices, restrictions on electricity production, higher electricity prices, and disruptions in traffic on roads, railways, and inland waterways further worsen the damages. France is the country hardest hit economically. Here, Triodos Bank estimates that GDP growth could be reduced by 1.4 percentage points, while Italy, Spain, and to a lesser extent Belgium also face significant losses. In Austria, the drought has caused agricultural losses estimated at 1 billion euros, according to the Austrian hail insurance company Österreichische Hagelversicherung, after rainfall in some regions has been 75 percent below normal since mid-June. In the Netherlands, an estimated decline in GDP growth of 0.8 percentage points will cause the economy to essentially stagnate, while Poland is less affected, as the country is expected to experience fewer unusually hot days. Projections for both crop yields and dairy production in 2026 have also been lowered due to the heat, and according to Triodos Bank, these downward revisions will have a negative GDP impact of about 0.15 percentage points in the EU. And it’s not only the economy and agriculture that are affected: media outlet Politico has calculated that there were at least 14,000 additional deaths in the six hardest-hit European countries during the heatwave from June 18 to July 1. Another dataset from EuroMOMO—a joint European mortality monitoring system—showed nearly 11,000 excess deaths in just one week—from June 22 to June 28. The numbers do not in themselves indicate that the deaths are directly caused by the high temperatures, but it is a very likely explanation, assesses Lasse Skafte Vestergaard from the National Serum Institute in Denmark: "There is no other obvious explanation or ongoing health threat in Europe that can explain this. And the scale of the numbers is quite unusual," he told the media outlet Politico. Change in EU policy In recent years, the EU has made a significant shift away from its Green Deal—aimed at making agriculture, industry, and transport more environmentally and climate-friendly. After large protests from parts of the agricultural sector combined with a rightward shift in the EU Parliament following the 2024 election, the tone has changed. Now, the messages focus instead on supply security and better competitiveness, which has, among other things, led to relaxed climate targets, the abandonment of the goal to halve pesticide use, and eased trade restrictions intended to prevent deforestation outside the EU. However, it is a complete misconception to think that a slower green transition would benefit competitiveness and agriculture. Bob Ward, director of policy and communications at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, argues: "There is still the misconception—completely wrong—that climate policies come at the expense of the economy. And we have long known that the consequences of not tackling climate change will cost us far more than all climate measures combined," he said earlier this month to Politico. According to researchers at World Weather Attribution, who calculate the probabilities of weather events being linked to climate change, the heatwave in June was practically impossible without climate change. Based on his analysis, Triodos Bank recommends adaptation measures such as better building insulation, adjusted working hours, and more equal access to air conditioning. However, adaptation alone is not enough, the bank states, and therefore urges politicians to quickly phase out fossil fuels and simultaneously implement policies that reduce overall energy and material consumption.