Economists have a new macroeconomic indicator to watch: heat.
Bloomberg surveyed analysts from ING, Allianz, and other institutions, and they largely agree that the thermometer now deserves as much attention as inflation. One analyst put it bluntly: temperature has become a “leading indicator.” Europe, after all, is warming roughly twice as fast as the rest of the world, providing no shortage of data points.
The numbers back it up.
According to the European Commission, EU countries will need to spend around €70 billion a year through 2050 on climate adaptation alone. Allianz estimates that by 2030, heat-related losses could reach $130 billion in Germany and $240 billion in France. Extreme heat reduces labor productivity, damages infrastructure, fuels food inflation (which the European Central Bank estimates could add 0.4–0.9 percentage points), and pushes the economy deeper into an uncomfortable stagflationary trap.
There is also a regional dimension. Northern Europe, with its cooler climate, may actually benefit from rising temperatures, while the continent’s largest economies—Germany, France, Italy, and Spain—are expected to bear the heaviest costs.
Perhaps the most revealing part, however, is not the economics but the psychology. IPCC reports have been published for decades, and this summer’s death toll from extreme heat has already exceeded 13,000. Yet for many people, these warnings remained strangely abstract. The moment global warming appeared as a line item in GDP forecasts, however, it suddenly became “real.” Even some long-time skeptics are beginning to reconsider their views.
Capital is expensive. Human life is cheap.
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