NETHERLANDS / RankWire.AI / – Europe’s summer heat and drought could cut about 1% from European Union economic output in 2026, according to Triodos Bank. The estimated loss equals roughly €180 billion and comes during a year of already modest economic growth. The European Commission projected in May that EU gross domestic product would expand 1.1% this year. That leaves the estimated weather-related damage close to the bloc’s entire expected annual increase in output.
Lower labour productivity accounts for the biggest part of the estimated economic impact. The assessment puts the productivity loss at about 0.6% of EU GDP as extreme temperatures affect working conditions. Agriculture also faces pressure, with output estimated to decline between 3% and 7%. Energy production, transport and logistics add further costs as high temperatures, drought and low water levels disrupt activity across several sectors.
The economic estimate follows record heat across western Europe during June and July. Copernicus reported an average temperature of 21.62°C across the region during those two months. That was 2.79°C above the 1991-2020 average and marked the warmest June-July period on record. July also brought widespread dry conditions, while parts of France, Germany, Austria, Hungary and the Iberian Peninsula recorded exceptionally low soil moisture.
Worker productivity leads estimated losses
France faces the largest national impact in the analysis, with GDP growth reduced by about 1.4 percentage points. That estimate would place French economic output near a 0.6% contraction for the full year. Italy and Spain also rank among the major economies facing significant losses from heat and drought. Belgium shows a smaller but notable impact, while the Netherlands could lose about 0.8 percentage points of growth.
Europe began the summer with limited economic momentum before the latest heat-related assessment. EU growth reached 1.5% in 2025, while the current 2026 forecast stands at 1.1%. The euro area growth forecast was 0.9% in the spring outlook. Weather-related losses can reach several parts of the economy at once through reduced working hours, weaker farm production, electricity constraints and transport interruptions.
Food, energy and transport add pressure
Extreme heat has already shown measurable effects on prices and business activity in Europe. European Central Bank research found that the 2025 summer heatwave lifted euro area unprocessed food prices by 0.4 to 0.7 percentage points after one year. Separate firm-level research in Italy found that extreme heat reduced company sales by about 0.8%. Days above 40°C also produced substantial losses in production and worker productivity.
The 2026 assessment measures the direct economic effects linked to this summer’s heat and drought. Its estimated 1% reduction in EU GDP is close to the bloc’s current 1.1% annual growth forecast. Labour productivity represents the largest source of the estimated losses, followed by agriculture and disruptions to energy and transport. Record heat, dry soils and low river levels have made extreme weather a measurable factor in Europe’s economic performance this year.