Climate change: Heatwave costs the German economy billions

A desk by the window, a building that faces south — during Germany's cold and dark season, sunlight and warmth are a clear advantage. In summer, however, such workstations, without shading and air conditioning, can become unbearably hot. As a result of climate change, heatwaves of up to 40 degrees Celcius are now occurring in Germany more frequently — and lasting longer.

Effective cooling is still relatively uncommon in Germany. While air conditioning is considered virtually standard in the United States, it is present in just 6% of private households in Germany. By contrast, 50% of office and administrative buildings are now equipped with cooling systems.

"In northern countries, buildings tend to be designed to retain heat because of the cold winters", explained economist Katharina Utermöhl, who works in economic policy research at the insurance group Allianz. She is a co-author of a study examining the impact of heat on the German economy. The study warns of enormous costs as productivity declines and energy expenses rise. Extreme heat is no longer merely a short-term weather phenomenon, but a structural economic shock.

Temperatures above 30 degrees Celsius place a significant strain on the human body — especially when it is not accustomed to them. Concentration declines, perspiration increases, and the cardiovascular system as a whole is affected.

According to Utermöhl, who spoke to DW, this has measurable consequences for the world of work. "Above 30 degrees, productivity drops by 3% per degree, while energy costs rise by 1.2% percent per degree." People work more slowly, mistakes become more frequent, and machines overheat. If cooling is used, more electricity is required — and that is expensive.

Above 30 degrees: less productivity, more illness

Heat places the greatest burden on those who work outdoors — for example in construction, agriculture, or in delivery services. Their health is acutely threatened by high temperatures. According to the German Federal Ministry of Labour, overall sick leave rises by around 3.5% on days when temperatures exceed 30 degrees Celsius, and by up to 6% during prolonged heatwaves. This, too, results in a decline in productivity.

According to the Allianz study, Germany's total economic losses between 2026 and 2030 could amount to around $131 billion (€120 billion). Losses in gross domestic product — that is, overall economic output — of up to 3% are also considered possible. Declining returns could dampen companies' willingness to invest. In turn, this could further undermine future productivity and competitiveness, the study states.

Hottest June since records began

Yet, Germany still ranks in the middle range when it comes to the potential economic damage caused by climate change. France, Italy, and Spain are already more severely affected, while Northern European countries continue to benefit, as milder winters reduce the need for heating.

The current heatwave in Germany is the longest ever recorded in June since the beginning of weather records.

"Europe is warming faster than any other continent — and we are paying for it with human lives", said Hans Henri Kluge, the World Health Organization's (WHO) the Regional Director for Europe, in Berlin. More than 200,000 people in Europe have died as a result of heat over the past four years.

How hot can workspaces become?

Germany has a "Workplace Ordinance”. It stipulates that employers must assess measures to counter heat stress once room temperatures reach 26 degrees. From 30 degrees onwards, protective measures such as providing drinks or adjusting working hours are required. At temperatures above 35 degrees, a workspace is generally considered unsuitable.

That is not enough for the opposition Left Party. It is calling for stricter heat protection measures to be enshrined in law. It is demanding that, in indoor spaces, drinks, sun protection and fans be provided, along with additional breaks. People who work outdoors should be eligible for a "climate short-time work allowance.”

Heat protection as part of risk management

Utermöhl above all calls for long-term thinking and preventive action: "Germany must stop treating heat as a summer problem" — it is a "permanent task of economic policy." The key concept is risk management; dealing with heat must be integrated into all aspects of corporate planning — from analyzing supply chains and managing personnel to making real estate decisions.

Here, too, the economist sees the government as having a responsibility to treat heat protection as a central aspect of economic policy. "For example, tax incentives could be introduced for buildings designed to cope with rising temperatures and heatwaves." Light-colored facades would help, as would shading measures or the greening of buildings. Urban planning as a whole would need to be rethought.

Heat also has an impact on infrastructure. "At 38 degrees Celsius, parts of our infrastructure no longer function properly," Utermöhl observed. "In this area, the government must invest more and ensure that infrastructure is properly prepared." Yet another immense task for Germany, whose finances are already under considerable strain.

This article was translated from German.