Fwd: How heat shocks Europe’s economy
Loretta Lohman
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The world’s fastest-warming continent is not spending nearly enough to cope with extreme heat despite having more resources than most to do so. In today’s newsletter we talk to economists in Europe about how this summer’s heat waves are a wake-up call for policymakers to get serious on adaptation. We also bring you details on the UK’s new Energy Secretary. Do you like reading our stories? Subscribe to Bloomberg.com for unlimited access to all climate and energy coverage. Heat weighs on Europe’s economyBy Laura Millan Europe’s status as the planet’s fastest-warming continent is becoming a serious drag on its economic prospects. The region, where temperatures are rising at a pace that’s roughly twice the global average, can no longer afford to ignore the economic impact of global warming, according to economists interviewed by Bloomberg. They say governments will need to invest billions of euros in the years ahead to protect citizens from increasingly dangerous heat waves that are already cutting productivity, hurting industry and resulting in significant numbers of deaths.  People
rest in cool conditions in Paris on July 12.
Photographer:
Gauthier Bedrignans/AFP/Getty Images
This summer’s heat waves should be a “wake-up call for all European policymakers,” Carsten Brzeski, global head of macro at ING Group NV, said in an interview. The temperature extremes have “really gripped all of Europe.” The economist, who spends most of his time forecasting key macroeconomic measures such as inflation and gross domestic product, says the thermometer has now “become a leading indicator” that people like him need to track. The European Commission this year estimated that EU member states should be spending close to €70 billion ($80 billion) each year through 2050 to adapt to the fallout from rising temperatures. Allianz SE, Europe’s largest primary insurer, recently published heat-impact simulations showing that Germany, the biggest EU economy, faces economic losses through 2030 of about $130 billion. For France, the amount is $240 billion.  The Allianz figures, which are extrapolations based on the estimated cost of heat waves between 2014 and 2024, surprised the economists doing the analysis, says Hazem Krichene, a senior economist on climate at Allianz. They knew there’d be an economic impact, but Krichene says he and his team “didn’t expect it to be so huge.” Europe’s housing and infrastructure is mostly built to shield it from the effects of cold weather. But increasingly, for a few months every year, that infrastructure needs to be able to withstand extreme heat too. Heat creates a feedback loop in which expected returns on capital decline, investments fall and productive capacity is reduced, Allianz’s research found. That leads to a stagflationary environment, which can quickly become a nightmare for policymakers trying to maintain stability in Europe’s biggest economies.  “What we show in our analysis is that if you do nothing you will have a fiscal cost,” Krichene said. “The awareness is there, but how to materialize this into concrete action, this is what we’ll see in coming months.” Keep
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Growing gap$300 billion The gap on adaptation funding for developing nations. Poor countries will need between $310 billion and $365 billion in adaptation finance per year by 2035, according to UNEP Cost of inaction“When we don’t invest in adaptation and resilience, we are just pushing the problem forward into the future at a much, much higher cost.” Linda Freiner Zurich Insurance Group chief sustainability officer Fahnbulleh becomes UK Energy Secretary Miatta
Fahnbulleh
Photographer:
Leon Neal/Getty Images via Getty Images Europe
Miatta Fahnbulleh, an economist, returns to the ministry where she began her political career, but this time in the top job. She enjoyed a rapid ascent after entering Parliament in 2024, becoming a junior energy minister before moving to the ministry of housing. She was one of a sprinkling of ministers to quit after Labour’s disastrous performance in the local elections in May, saying the government had failed to act with enough “vision, pace and ambition.” She also criticized its attempts to cut winter fuel payments and disability benefits. Since leaving government, she’s helped Burnham on policy. Fahnbulleh was born in Liberia and is the daughter of a former foreign minister of that country. Her family fled the civil war there when she was a child, and she grew up in southern England, going on to study at Oxford. Before becoming an MP, she ran the New Economics Foundation think tank and served as head of cities in the Cabinet Office policy unit. This week’s Zero listenAndy Burnham has become the UK’s sixth prime minister in just 10 years. When it comes to energy and climate, Labour Party’s Burnham will inherit many of the same challenges of his predecessors: high energy prices, security of supply and an increasingly polarized debate over the UK’s ambitions to reach net zero. This week on Zero, Akshat Rathi sits down with Dale Vince, founder of Ecotricity and major donor to Labour, to ask, can a new UK government make energy cheap? Listen now, and subscribe on Apple, Spotify or YouTube to get new episodes of Zero every Thursday. China’s still building wind and solarChina’s construction pipeline for utility-scale wind and solar plants continues to outrun the rest of the world, even as the risk increases that some of the power generated will be wasted. The country had about 262 gigawatts of solar and 251 gigawatts of wind under construction in June, according to a Global Energy Monitor report on Tuesday. Both numbers are up from the end of 2025 and show that China is maintaining its renewables pace, despite the massive slowdown in official installation data, said Aiqun Yu, senior East Asia strategist for GEM, which tracks energy infrastructure.  The distortion has arisen after new electricity pricing rules from June 2025 led companies to speed up construction schedules to finish before the deadline, effectively front-loading installations. Overall building activity has remained relatively consistent, Yu said. See
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🎥 Attention all filmmakers!Working on a short documentary about climate change? Don’t miss your chance to submit it to the Bloomberg Green Docs film competition. Grand prize: $25,000. Submissions accepted through August 14, 2026. See official rules at bloomberg.com/greendocs. More from GreenPhoto finish Last week, US President Donald Trump threatened higher tariffs to punish Canada for the wildfire smoke that worsened air quality in cities in both countries, including Ottawa, Toronto, New York and Washington. Satellite images between July 1 and 17 captured the vast amounts of smoke released into the atmosphere from wildfires burning in Canada. More from Bloomberg
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