Spain’s summer could leave economy up to €24bn poorer

Spanish beaches were still packed this summer, but many of the tourists who sweated through the worst heatwaves are already less likely to come back. That reluctance is one reason economists estimate this summer’s extreme heat has cost Spain’s economy up to €24 billion, with far bigger bills forecast ahead.

Tourists are already thinking twice about returning

Spain’s tourism industry has long been considered one of the most resilient in Europe, but this summer’s heat may have found its weak spot. Economist David César Heymann of CaixaBank Research studied card payment data and found that tourists who experienced Spain’s most extreme heatwaves this year were around 15 per cent less likely to say they would return.

That’s a genuine warning for a country where entire regional economies rely on tourism, from the Costa del Sol to the Balearic Islands. ING economist Carsten Brzeski considers the long term risk very serious, asking whether holidaymakers will keep “marching through southern Italy or Spain in 45 degrees” as summers grow hotter.

Crops wither and workers slow down in the heat

The heat has not only affected beaches and city pavements. In Extremadura and western Andalucía, maize and sunflower crops suffered losses of 6 to 7 per cent by July, whilst outdoor workers have also paid a price. Research from the European Central Bank found that a two-degree rise in temperature cuts labour productivity by 1.7 per cent, rising to 6.8 per cent at four degrees above normal, which after the scorching heatwaves of this years summer, created a direct hit to construction, agriculture and tourism, three of the sectors that keep Spain’s economy moving.

How the €24 billion bill breaks down

Put together, Allianz Research estimates Spain’s summer heat losses at between €17 billion and €24 billion, equivalent to 1 to 1.4 per cent of the country’s gross domestic product (GDP).

Triodos Bank puts the same broad drag on Spain’s GDP at around 1 per cent, and estimates the heat cost the whole European Union close to €180 billion this year alone. Agriculture, constrained energy generation and transport disruption each accounted for a slice of that EU-wide bill, but labour productivity losses made up the largest share.

France’s economy minister, Roland Lescure, called the impact on French growth “terrible” and “enormous” after revising the country’s GDP forecast down. The Netherlands also lost ground, while Poland, spared the worst of the heat, is on course to grow.

A single bad summer adds to a growing bill for Spain

This summer’s losses are not a one-off though. Spain’s independent fiscal watchdog, AIReF, calculates that weather and climate-linked costs have totalled more than €65 billion between 2005 and 2025.

The Valencia DANA flooding disaster in October 2024 alone cost an estimated €12.2 billion, including €8 billion in emergency state funding and €4.2 billion in insurance payouts. Research from the Brussels-based think tank Bruegel puts the cumulative bill since 1980 at more than €2,500 for every person living in Spain.

Everyday costs now, and a bigger risk by 2030

For people living in Spain, the effects reach beyond headline GDP figures. Heat-related losses are estimated to have shaved around 1.3 per cent off Spain’s tax take, money that funds public services, while crop damage raises the risk of higher food prices reaching supermarket shelves. 

The outlook doesn’t improve quickly. Some forecasts suggest heat-related productivity losses in southern Spain could reach 20 per cent by 2030, with climate change cutting growth by 5 to 7 per cent in the most exposed economies, including Spain, France and Italy. Longer term, researchers project GDP losses of around 2 per cent by 2040 and 3 per cent by 2060.

Heather Grabbe of Bruegel and Maximilian Kotz of the Barcelona Supercomputing Center have both warned that the economic damage from an extreme summer does not end when the temperatures drop. It compounds in the years that follow, making each hot summer more expensive than the last.