Spain’s brutal summer could leave economy up to €24bn poorer, with worse to come

Extreme summer heat has dealt a significant blow to Spain's economy, potentially costing it up to €24 billion, with worse to come. While Spanish beaches remained crowded this summer, many tourists who endured the worst heatwaves are now less inclined to return, which could dent Spain's tourism-dependent economy. Economist David César Heymann from CaixaBank Research found that tourists who faced Spain's most extreme heatfalls this year were about 15% less likely to return, a worrying sign for a country where regional economies depend heavily on tourism.

The heat has also impacted crops in Extremadura and western Andalucía, with maize and sunflower yields declining by 6 to 7% by July. In addition, outdoor workers have suffered due to the scorching temperatures. The European Central Bank estimates that a rise in temperature by two degrees cuts labor productivity by 1.7%, and by four degrees, this could rise to 6.8%.

According to Allianz Research, Spain's summer heat losses could range between €17 billion and €24 billion, equivalent to 1 to 1.4% of the country's GDP. However, this is not the first time; weather and climate-linked costs have totaled over €65 billion between 2005 and 2025. The cumulative bill since 1980 has amounted to more than €2,500 for every person living in Spain.

The effects of the heat extend beyond GDP figures, with heat-related losses estimated to have shaved around 1.3% off Spain's tax take, which funds public services, and increased crop prices that could lead to higher food costs. Forecasts suggest that heat-related productivity losses in southern Spain could reach 20% by 2030, with climate change potentially slashing growth by 5 to 7% in exposed economies, including Spain, France, and Italy, leading to a 2% GDP loss by 2040 and 3% by 2060.