The violent weather that pounded Europe this summer inflicted economic losses of at least €43 billion in the short term, with expectations to reach €126 billion by 2029, according to a EU-wide estimate. The impact on the economy, resulting from a single harsh summer of heat, drought, and flooding, accounted for 0.26% of the EU’s economic output in 2024. The study, which draws on the relationship between weather and economic data that was published in an academic research this month, suggests that the results are conservative as they do not account for the recent wildfires in southern Europe or the cumulative impact of simultaneous extreme weather events. These estimates could aid policymakers in providing support in the absence of official data, highlighting the slow emergence of true costs of extreme weather events, which affect lives and livelihoods in multiple ways.
Mediterranean countries like Greece, Spain, and Portugal bore the brunt of the damage, each suffering losses over 1% of their 2024 GDP. The study by University of Mannheim economists and European Central Bank suggests that the broader economic impacts of extreme weather may far exceed immediate damages.
While research often focuses on direct impacts of climate breakdown like destroyed assets or insured losses, the study considered ripple effects such as a reduction in working hours during heatwaves or disruptions to commute times due to flood-damaged railways. This study thus signifies that the wider impacts of extreme weather last longer and are larger than people may assume. However, it uses “imperfect proxies” to identify extreme weather and may underestimate the full costs. Additionally, the study does not fully capture the cost of extreme weather on vulnerable populations and firms nor the benefits of reducing vulnerability.
Gert Bijnens, an economist at the National Bank of Belgium, argues that supply chain disruption is a significant “hidden cost” that typically goes uncounted. A study he co-authored on the costs of the devastating Belgian floods in 2021 found that sales at manufacturing firms fell sharply if they had suppliers in the flood zones, illustrating how such indirect effects can be just as damaging as direct destruction. There is uncertainty around these estimates, but the clear message is that extreme weather is already leaving a distinct economic imprint.
Source: https://www.theguardian.com/world/2025/sep/15/europes-summer-of-extreme-weather-caused-43bn-of-short-term-losses-analysis-finds
