Verdant thinktank estimates £4.4bn economic loss from UK heatwaves

A report by the Verdant thinktank estimates that repeated heatwaves in the UK have cost the economy £4.4bn in lost output by the end of July, with projections suggesting annual costs could exceed £25bn by 2030. The analysis attributes the losses to reduced worker productivity and infrastructure shutdowns due to extreme temperatures, particularly in London and the south-east. Verdant is calling for government intervention, including the implementation of maximum working temperatures and urban redesign to create cooler green spaces. The findings align with research from the Grantham Research Institute, which reported significant productivity drops and health impacts during June's heatwave.

The £4.4bn figure updates Verdant’s previous assessment of a £2.36bn cost for June’s heatwave, incorporating losses from May and July. James Meadway, Verdant’s director, stated that government action to protect workers and businesses from extreme heat is overdue. The Met Office issued an amber weather warning for extreme heat in England, with the UK on course to record its hottest summer ever. Verdant’s estimates exclude indirect losses such as wildfire fighting costs and increased electricity consumption from cooling.

The largest economic impact is attributed to London and the south-east, where temperatures have been highest. Verdant’s methodology relies on cross-European estimates by insurer Allianz, suggesting a 3% decline in hourly worker output for every degree above 30C. Sadiq Khan cited the extreme temperatures as evidence that the Labour government should adhere to its net zero climate targets. The TUC, led by Paul Nowak, is calling for rules requiring employers to reduce temperatures when they exceed 24C and to stop work at 30C (or 27C for strenuous jobs).

The Grantham Research Institute at the London School of Economics reported a £1bn-plus loss of output during June’s heatwave alone. A Grantham survey of 2,000 people found that 3.6% of respondents did not work at all during the week of 22 June due to high temperatures, while 87% reported health-related impacts. Almost three-quarters of England has been officially declared in drought following repeated heatwaves.

Economists have warned about mounting economic costs of extreme weather, including risks of higher inflation due to rising food prices from production hits by droughts, floods, and wildfires. Extreme heatwaves have also affected much of Europe this summer. The thinktank’s findings underscore the growing pressure on institutional frameworks to address climate-related economic disruptions through structural policy changes rather than reactive measures.