Europe's Extreme Weather Takes a Toll on Economy and Business Activity

Europe's extreme weather has taken a significant toll on its economy and business activity. Economists predict that the heat wave, drought, and wildfires could shave around 1% off the European Union's gross domestic product growth this year, equivalent to approximately EUR 180 billion.

The sectors most affected are chemicals and industrial companies, agriculture, and utilities. While some consumer goods firms like Magnum MICC or H&M may experience an uplift in sales due to the heat wave, others such as airlines could be losers if more people holiday in their own countries.

Low river levels have severely restricted transport along Europe's most important waterways, forcing industrial companies to turn to more expensive rail and road transport. This has led to increased costs for chemical companies like Covestro and BASF, which have declared force majeure due to transport problems.

Agriculture is also suffering across the continent, with crop failures and lower yields putting upward pressure on food prices. The European Commission's Joint Research Center has cut EU yield forecasts for winter crops by 1%-4% and forecasts for grain maize and sunflower by 6%-7%, as heat and insufficient rainfall depleted soil moisture.