The losses incurred by the 30 European countries amount to approximately 0.46% of their projected combined GDP, according to an Allianz Trade study on the climate economy in 2026; this figure accounts for costs associated with disaster-related damage as well as production losses and pressure on household purchasing power driven by headline and food inflation.

"Italy bears the heaviest burden at €27.8 billion, followed by Germany at €25 billion and France at €20.1 billion," Allianz Trade estimates.

The loss for Italy exceeds that of Germany despite its significantly smaller economy, as the impact on growth amounts to 1.19 percentage points compared to 0.54 points for Germany, the text notes.

When Belgium (at €9.4 billion) and the Netherlands (at €9.2 billion) are included, the share of these five economies reaches 81% of the total, the study adds.

In Germany, the loss is explained mainly by a drop in productivity linked to intense heat, higher workplace absences and longer breaks, amid limited access to air conditioning.

"This results in lost production as well as a drop in added value," the study said.

Europe's biggest economy has seen wildfires and serious impacts on harvests, as well as river levels dropping and restricting crucial navigation routes.

"Heat is a risk that is often underestimated," said Frank Sommerfeld, CEO of Allianz.

The study also warned against another risk linked to El Nino, a climatic phenomenon linked to unusual warming of Pacific Ocean surface water that can result in shifted rainfall patterns.

Higher global temperatures increase the likelihood of a severe El Nino developing, resulting in possible droughts and crop failures.

The 2026-27 El Nino is forecast by the World Meteorological Organization to be the largest in at least 1,000 years.

El Nino could cost 144 economies, nearly 392 billion euros next year and lead to a further rise in food prices in Europe, the study said. 

For the 27 EU member states, the net loss resulting from this phenomenon could amount to "$24 billion, or 0.09% of GDP" (excluding droughts, wildfires, and other extreme events), with an inflationary effect on prices.

Nearly 60 percent of the estimated gross losses would, however, be borne by China, the United States and India, Allianz climate economist Hazem Krichene said.

"Economic damage linked to climate change is expected to remain with us in the coming years," Krichene said.