ECB | Lagarde: Europe’s hot summer is a warning for the economy

In a blog post, ECB President Christine Lagarde says this summer’s heatwaves, droughts and wildfires had only a small, short-lived effect on euro area growth. She warns the longer-term costs are larger: output in affected regions stays about 1.5% lower two years after a heatwave and about 3% lower four years after a drought, and only about a quarter of catastrophe losses in Europe have historically been insured. She calls for an EU-level public-private reinsurance scheme, faster grid and storage investment, and simpler rules for companies to generate their own power.
Why it matters: Climate risk is becoming a bigger factor in insurance costs, energy prices and investment decisions for companies operating in Europe.

Compliments of European Central Bank