The record-breaking June 2026 heatwave that saw temperatures exceeding 37 degrees in parts of the UK had direct economic consequences as exceptional temperatures make work harder to perform.
Verdant, an economic-policy focused think tank, has produced a first estimate for the likely economic impact of the extreme heat in the June 2026 heatwave, based on research showing 30 degrees as a crunch point after which productivity losses become more severe.
Verdant’s mapping of UK local authority areas with days above 30 degrees in June suggests the direct impact on UK productivity alone of this extreme heat cost at least £2.4bn in lost output.
Productivity
Dr James Meadway, co-director of Verdant, said: “These first estimates show the economic costs of extreme heat are already here, and only likely to worsen.
"Urgent action is needed from government to limit the damage, including protecting those at work with a maximum working temperature.”
With a third heatwave already hitting the UK and much of Europe in July, we can expect further losses over this year.
Looking ahead, and assuming heatwaves develop annually on the same trends as over the previous decade, these losses will become very substantial. By the end of 2030, Verdant expects output losses alone from heatwaves will come to at least £25bn, if action is not taken to reduce their impacts.
These are the losses only from reductions in productivity as a result of extreme heat.
Extreme
They do not include the potential losses from rising energy costs, or the longer term impacts on investment, the broader macroeconomy. As a result, these losses should be considered a minimum expected loss from extreme heat.
The well-documented impacts of extreme heat on productivity include the physical difficulties of performing work and cognitive impairment, as well as the damage done to physical infrastructure and equipment. An extended period of extreme heat, as we saw in June, will compound these economic losses.
The Committee on Climate Change has recommended an expenditure of £3.85bn a year, on average, on measures to adapt to the effects of extreme heat over the next few decades.
These expenditures will need to be made by government, and by firms and households, and include the provision of air conditioning in public buildings.
Importantly, these projected costs are significantly lower than the expected minimum losses from extreme heat, which are likely to rise rapidly every year until the end of this decade and beyond. The case for investment in adaptation is economically robust.
Greening
Verdant make four main policy recommendations. These include a national maximum working temperature, as recommended by the Committee on Climate Change and as already implemented in Spain and Belgium;
It also recommends novel national heat insurance mechanism, paid out to those unable to work when temperatures exceed a maximum, and financed potentially through an Extreme Weather Levy on fossil fuel investments.
The government must also Investment in active cooling, with healthcare settings as a public priority, but across indoor workplaces, and paired to renewable generation where possible;
Finally, Verdant suggests the redesign and replanning of our urban environments to reduce their heat sink effects, including greening urban spaces, mandatory passive cooling in new builds and renovations, and the provision of public cool spaces.
This Author
Brendan Montague is an editor of The Ecologist.
