UK heatwaves may have cost economy £4.4bn in lost output so far this year, analysis finds

New analysis from thinktank Verdant indicates that the UK heatwaves this summer could have cost the economy over £4 billion in lost output by the end of July. The organization had previously estimated June's unseasonably hot weather to have an economic cost of £2.36 billion, and with updates to include the temperatures of the previous month, the figure now stands at £4.4 billion.

As temperatures continue to rise, James Meadway, Verdant's director, asserts that the economic consequences of climate change are not only present but will only worsen in the future. He urges the government to take swift action to safeguard workers and businesses from the severe impacts of extreme heat.

The economic costs of heatwaves primarily stem from reduced worker productivity and overheating infrastructure and equipment. The Met Office has issued an amber heat warning for extreme temperatures in England, following three previous heatwaves in May, June, and July. The UK appears to be on track for its hottest summer ever.

Verdant suggests that the government should set a maximum working temperature and be prepared to compensate workers who are forced to cut their hours due to extreme heat. The report also emphasizes the need for investment in urban redesign to create cooler green spaces in urban areas. The estimates do not account for indirect losses such as wildfire fighting costs and additional electricity consumption for fans and air conditioning.

Concentrated in London and the southeast, these heatwaves have had the most significant impact on worker productivity. The thinktank projects that, if heatwaves continue to intensify at the current rate, the annual economic cost could soar to over £25 billion by 2030. Verdant's projections are based on cross-European estimates by the insurer Allianz, which suggest that for every degree above 30°C, workers' output per hour declines by 3%.

These estimates align with research from the Grantham Research Institute at the London School of Economics, which determined that June's heatwave alone resulted in a £1 billion or more loss of output, from workers reducing their hours or experiencing decreased productivity due to high temperatures.

A survey of 2,000 individuals conducted by the institute found that 3.6% of respondents did not work at all during the week of June 22 due to the heat, while 87% reported at least one health-related impact, ranging from disrupted sleep to dizziness. Climate change experts have repeatedly cautioned about the mounting economic costs of extreme weather events, including the potential for higher inflation due to rising food prices as production is adversely affected by droughts, floods, and wildfires.

Three-quarters of England has been declared officially in drought following the repeated heatwaves, which have also affected much of Europe. London Mayor Sadiq Khan highlighted the effects of this year's extreme temperatures as proof that Labour should support net zero targets and adhere to its climate commitments. "The climate emergency is here – and no one can say they didn't see it coming," he wrote.

Paul Nowak, the general secretary of the TUC, stated that as climate change leads to more frequent heatwaves, workers are suffering, and productivity is being impacted. Unions are advocating for policies that require employers to take action to reduce temperatures when they exceed 24°C, and work should cease when temperatures reach 30°C or 27°C for physically demanding jobs.