ING warns eurozone heatwaves now pose structural economic threat

As Europe endures another punishing summer — with more than 1,300 excess deaths reported since June 21 and temperature records shattered across the continent — ING ↘ 0.64% is sounding the alarm that recurring heatwaves have crossed from a meteorological nuisance into a structural economic threat for the eurozone.

A New Downside Risk

Carsten Brzeski, ING's Global Head of Macro, argued in a note published over the weekend that the old framing of heatwaves as temporary, insurable costs is "becoming outdated." Citing a 2021 study of Europe's worst heat years, Brzeski noted continent-wide GDP losses from reduced labor productivity alone at 0.3–0.5% of output, exceeding 1% in the most exposed regions.mitrade

The warning draws on a joint paper from the University of Mannheim and the European Central Bank analyzing the heatwaves, droughts and floods of 2025, which estimated the European economy lost around 0.3% of output. That damage could grow to an accumulated 0.8% by 2029 once the effects of lost productivity, supply chain disruption, and depressed tourism revenue are factored in.mitrade

Inflation Complications for the ECB

The analysis carries direct implications for monetary policy. Brzeski cited previous ECB research estimating that heatwaves and drought could push up food inflation by 0.4 to 0.9 percentage points, with that effect potentially doubling over the next 30 years. With ING already forecasting a greater than 50% probability of two ECB rate hikes this summer — framed as "insurance" against falling behind the curve — climate-driven supply shocks risk making core inflation stickier than policymakers anticipate.tmgm+1

Looking ahead, Brzeski flagged potential supply chain frictions from low water levels on major rivers, affected railways and highways, and broader productivity losses as specific channels through which this summer's heat could weigh on output.mitrade

Europe's Extreme Summer

The economic warning lands amid a continent-wide crisis. The World Health Organization said more than 1,300 excess deaths have been documented in Europe since June 21. France recorded its hottest June day ever on June 23, and on Sunday temperatures reached 40°C in parts of Germany, Poland, and the Czech Republic. The World Meteorological Organization confirmed that a widespread heat dome has shattered numerous records across the continent.aljazeera+3

The Copernicus Climate Change Service reported that the heatwave pattern began as early as late May, when western France, England, and Wales saw daily average temperatures more than 10°C above normal. Scientists from the World Weather Attribution initiative concluded that fossil fuel emissions have "rapidly worsened" European heatwaves in recent decades.worldweatherattribution+1