London swelters under a historic heatwave that has pushed temperatures above 45 °C in parts of Spain and set new June records in France and the UK. The extreme heat is forcing power plants offline, spiking electricity costs and derailing rail services across the continent. Allianz warns that Europe now faces a structural economic risk from such events.

Research cited by Allianz shows previous heatwaves shaved up to 0.5% off Europe’s annual GDP, with southern economies losing more than 1 %. Labor productivity drops roughly 3 % per degree above 30 °C, while energy demand climbs 1.2 % per degree, squeezing corporate margins and tax revenues. With air‑conditioning penetration at only 19 % versus 90 % in the US, the continent’s built environment amplifies the strain.

A separate MSCI study found 99.8 % of listed firms confront material financial exposure to heat, prompting the firm’s $120mn acquisition of First Street to bolster climate‑risk analytics. Investors, insurers and policymakers must now treat extreme heat as a core financial hazard, not a peripheral concern.