Heat waves and war tighten Europe’s economic outlook

Europe’s economy faces a one-two punch from record heat and drought that strain energy and transport, potentially costing about €180 billion (1% of GDP) this year. Low river levels on the Rhine and Danube, nuclear plant curtailments, and higher gas prices threaten production and food costs while storage remains tight ahead of winter. Although some analysts expect only modest growth impact, prolonged energy concerns and geopolitical tensions could keep prices elevated and energy security fragile, prompting calls for climate adaptation and smarter energy use.