A new economic analysis has revealed that Europe’s summer of extreme heatwaves, droughts, and floods in 2025 caused at least €43 billion in short-term economic losses. The report, conducted by economists from the University of Mannheim and the European Central Bank, estimates the damages at about 0.26% of the EU’s 2024 output.
The study warns that the long-term impact could be far greater, with ripple effects on productivity, supply chains, and infrastructure potentially pushing losses to €126 billion by 2029.
Mediterranean countries were hardest hit. Cyprus, Greece, Malta, and Bulgaria each lost more than 1% of their Gross Value Added (GVA), while Spain, Italy, and Portugal also suffered significant setbacks.
The analysis factored in not only direct destruction of assets but also disruptions to labor and transport. However, researchers noted that their estimates are conservative, as they do not include the record wildfires that swept southern Europe or the compounded effects of simultaneous disasters.
The findings highlight the mounting economic toll of climate change and underline the urgency for stronger adaptation measures to protect vulnerable sectors such as agriculture, transport, and construction.
