Climate shocks threaten 1 percent EU GDP loss, Sleijpen warns
Network for Greening the Financial System Chair Olaf Sleijpen warned that extreme weather could reduce European Union GDP by 1 percent this year, totaling approximately €180 billion. Speaking in Frankfurt, he stressed that central banks must account for mounting climate shocks to inflation.
Measuring the summer fallout
Early estimates indicate that adverse weather has delivered severe macro-financial shocks across Europe.
European grain harvests lost nearly 9 million tonnes of crops due to summer heat, creating an estimated €2 billion in direct trade losses.
Oxford Economics estimates that extreme weather could add more than 1 percentage point to food inflation next year, while Allianz Research calculates a 3 percent hourly productivity decline per degree between 30 and 35 degrees Celsius.
Overall, combined physical shocks could reduce European Union output by roughly 1 percent or €180 billion this year.
Worldwide damages reached over $200 billion in 2025, double the annual average of the 2000s.
The price of inaction
Central banks do not set climate policy, but Sleijpen emphasized that climate-driven disruptions directly influence monetary transmission, equilibrium real interest rates and financial stability.
“It is no longer possible to deny the economic impact of climate change,” Sleijpen said.
The Network for Greening the Financial System now spans over 150 authorities assessing these risks.
NGFS scenario modeling indicates that the economic costs of an orderly net zero transition remain minor compared to the compounding damage of unmitigated warming.
Hard numbers force the issue
Tying acute weather damages directly to GDP losses successfully strips climate analysis of political abstraction.
Immediate hits to food prices and productivity confirm that physical shocks now directly jeopardize price stability.
Yet rigorous scenario modeling cannot substitute for actual fiscal policy and binding emissions targets.