Key facts
- Repeated heatwaves this summer may have cost the UK economy over £4 billion in lost economic output by the end of July.
- Direct economic costs occur because workers are less productive and infrastructure overheats and shuts down.
- Verdant estimates that for every degree above 30C, workers' hourly output declines by 3%.
- The thinktank suggests annual economic costs could rise to over £25 billion by 2030 if heatwaves intensify at the current rate.
- Verdant is calling for government action, including a maximum working temperature and compensation for workers affected by extreme heat.
Repeated heatwaves this summer are estimated to have cost the UK economy more than £4 billion in lost economic output by the end of July, according to new analysis from the green thinktank Verdant. This figure updates a previous assessment of £2.36 billion for June's heatwave alone.
Direct economic costs arise as workers' productivity decreases in high temperatures, and infrastructure and equipment can overheat and require shutdowns. Verdant's director, James Meadway, stated that the economic costs of climate change are already present and expected to worsen, urging government action to protect workers and businesses.
The analysis relies on cross-European estimates from insurer Allianz, suggesting that for every degree above 30C, workers' hourly output declines by 3%. This aligns with research from the Grantham Research Institute at the London School of Economics, which indicated over £1 billion in lost output during June's heatwave due to reduced productivity and workers cutting hours. A survey by the Grantham Institute found that 3.6% of respondents did not work at all during the week of June 22 due to the heat, with 87% reporting health-related impacts.
Economists are increasingly highlighting the economic consequences of extreme weather, including potential for higher inflation due to impacts on food production. Almost three-quarters of England has been declared in drought following the persistent heatwaves, which have also affected other parts of Europe.
Verdant is advocating for government measures such as implementing a maximum working temperature and providing compensation for workers who have to reduce their hours because of extreme heat. The report also emphasizes the need for investment in urban redesign to create more green spaces. Verdant's estimates exclude indirect losses like wildfire fighting costs and increased energy consumption for cooling.
Paul Nowak, general secretary of the TUC, noted that workers are suffering and productivity is declining due to climate change-induced heatwaves. The TUC is calling for regulations requiring employers to take action when temperatures exceed 24C and to halt work when temperatures reach 30C, or 27C for strenuous jobs.