{"id":27453,"date":"2026-08-18T09:07:41","date_gmt":"2026-08-18T06:07:41","guid":{"rendered":"https:\/\/ukrmedia.news\/?p=27453"},"modified":"2026-08-18T09:07:41","modified_gmt":"2026-08-18T06:07:41","slug":"climate-damage-europe-public-finances","status":"publish","type":"post","link":"https:\/\/ukrmedia.news\/en\/economics\/climate-damage-europe-public-finances\/","title":{"rendered":"Climate-related losses are placing an ever-greater strain on Europe\u2019s budgets"},"content":{"rendered":"<p class=\"news-lead\">Increasingly frequent floods, fires and heatwaves could turn climate-related losses into a regular item of expenditure in European budgets. A significant proportion of losses in the EU are uninsured, so following disasters, the state is increasingly stepping in to cover the costs. The European Commission is drawing up a package of measures on climate resilience and reducing the insurance gap, which it plans to adopt by the end of the year.<\/p>\n<div class=\"news-summary-box\">\n<p><strong>Briefly about the main points<\/strong><\/p>\n<ul>\n<li>Climate-related disasters are becoming a recurring fiscal risk for Europe.<\/li>\n<li>Between 1980 and 2024, extreme weather events cost the EU 822 billion euros.<\/li>\n<li>In some countries, insurance cover for weather-related losses is below 5%.<\/li>\n<li>Following the floods of 2021, Germany spent around 30 billion euros of public funds.<\/li>\n<li>The EU is considering adaptation, reinsurance and joint risk financing.<\/li>\n<\/ul>\n<\/div>\n<h2>Losses caused by adverse weather are included in the list of permanent fiscal risks<\/h2>\n<p>Forest <a href=\"https:\/\/ukrmedia.news\/en\/world\/pozhezhi-frantsiya-ispaniya-evakuatsiya\/\">fires<\/a> In south-western Europe this year, the floods in Spain in 2024 and the floods in Germany and neighbouring countries in 2021 demonstrate the recurring nature of major weather events. These come on top of other budgetary pressures, notably rising defence expenditure and costs associated with an ageing population.<\/p>\n<p>The European Environment Agency has estimated the EU\u2019s total economic losses from extreme weather and climate events between 1980 and 2024 at 822 billion euros. A quarter of this amount was accounted for by the last four years alone, although the average deficit across eurozone countries already stands at around 3% of GDP.<\/p>\n<p>Head of the Western Europe Sovereign Ratings Practice at Fitch <strong>Federico Barriga-Salazar<\/strong> said that disasters, which were previously seen as one-off, costly events, are becoming more frequent. According to him, this forces governments with limited financial resources to choose between different areas of expenditure. The cost of reconstruction following the 2024 floods in Spain is estimated at 0.7 percentage points of output over the period 2024\u20132026.<\/p>\n<h2>The insurance gap increases the need for public funding<\/h2>\n<p>In the EU, around a quarter of losses from climate-related disasters are insured, whilst in some countries the level of cover is less than 5%. Some experts fear that, as the frequency of extreme events increases, the proportion of insured losses may decline.<\/p>\n<p>David Zan, Head of European Fixed Income Investments at Franklin Templeton, believes that the impact on individual countries could range from 1 to 2% per cent of GDP. He also suggested that the more such risks arise, the less they will be hedged against.<\/p>\n<p>The Bruegel think tank compared the impact of the 2021 floods in Belgium and Germany. In Belgium, most of the damage was covered by insurance, whereas in Germany, due to low levels of cover, around \u20ac30 billion in public funds was allocated to cover the bulk of the losses.<\/p>\n<h2>Greece and Portugal are seeking new models for disaster protection<\/h2>\n<p><a href=\"https:\/\/ukrmedia.news\/en\/world\/pozhezhi-gretsiya-zahybly-pozhezhnyky\/\">Greece<\/a>, whose economy is heavily dependent on tourism and is vulnerable to heatwaves and wildfires, is exploring ways to improve insurance cover and enhance the resilience of water and energy infrastructure in tourist areas.<\/p>\n<p>Following the severe flooding in early 2026 <strong>Portugal has announced its intention to introduce compulsory home insurance<\/strong>. It is to be supported by a fund for natural disasters and earthquakes, as well as a solidarity mechanism designed to ensure universal access to insurance.<\/p>\n<p>One such temporary instrument could be catastrophe bonds: investors can earn high returns, but may also lose some or all of their capital in the event of a pre-defined occurrence. Zan gave an example of a scenario in which such an instrument could prove costly for the state: over a five-year period without a catastrophe, it could end up paying 8% per year.<\/p>\n<h2>Brussels is preparing a decision on adaptation and risk-sharing<\/h2>\n<p>The EU is due to present proposals on climate resilience and risk management this autumn. Heather Grabbe, a senior research fellow at Bruegel, has called on governments to establish systemic mechanisms rather than one-off emergency spending, which could weaken incentives for households and businesses to take out insurance. She also emphasised the importance of investment in adaptation and cross-border risk pooling.<\/p>\n<p>A 2025 study by the University of Oxford described the \u00abadaptation investment trap\u00bb: recurring disasters increase debt and reduce the resources available for protective measures. Spanish Prime Minister Pedro S\u00e1nchez has stated that green investment amounting to 0.1% of GDP could prevent losses eight times greater than the investment itself, and avert losses in tax revenue three times greater than the initial amount.<\/p>\n<p>The European Central Bank has proposed a joint public-private scheme for reinsuring natural disaster risks, supplemented by an EU fund for public disaster financing. A spokesperson for the European Commission has stated that the EU\u2019s executive body is exploring ways to bridge the insurance gap as part of a package due to be adopted at the end of the year. The question remains as to whether the hot summer will strengthen the political will to fund such measures in advance.<\/p>","protected":false},"excerpt":{"rendered":"<p>The European Commission is preparing measures to promote climate resilience, adaptation and the reduction of uninsured losses in the EU by the end of the year.<\/p>","protected":false},"author":207433346,"featured_media":27452,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_description":"\u0404\u0432\u0440\u043e\u043a\u043e\u043c\u0456\u0441\u0456\u044f \u0434\u043e \u043a\u0456\u043d\u0446\u044f \u0440\u043e\u043a\u0443 \u0433\u043e\u0442\u0443\u0454 \u0437\u0430\u0445\u043e\u0434\u0438 \u0434\u043b\u044f \u043a\u043b\u0456\u043c\u0430\u0442\u0438\u0447\u043d\u043e\u0457 \u0441\u0442\u0456\u0439\u043a\u043e\u0441\u0442\u0456, \u0430\u0434\u0430\u043f\u0442\u0430\u0446\u0456\u0457 \u0442\u0430 \u0437\u043c\u0435\u043d\u0448\u0435\u043d\u043d\u044f \u043d\u0435\u0437\u0430\u0441\u0442\u0440\u0430\u0445\u043e\u0432\u0430\u043d\u0438\u0445 \u0437\u0431\u0438\u0442\u043a\u0456\u0432 \u0443 \u0404\u0421.","rank_math_title":"\u041a\u043b\u0456\u043c\u0430\u0442\u0438\u0447\u043d\u0456 \u0437\u0431\u0438\u0442\u043a\u0438 \u0404\u0421 \u0456 \u0432\u0438\u0442\u0440\u0430\u0442\u0438 \u0434\u0435\u0440\u0436\u0430\u0432\u043d\u0438\u0445 \u0431\u044e\u0434\u0436\u0435\u0442\u0456\u0432","rank_math_focus_keyword":"\u041a\u043b\u0456\u043c\u0430\u0442\u0438\u0447\u043d\u0456 \u0437\u0431\u0438\u0442\u043a\u0438","td_subtitle":"","subtitle":"","footnotes":""},"categories":[805618],"tags":[806753],"class_list":["post-27453","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economics","tag-806753"],"_links":{"self":[{"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/posts\/27453","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/users\/207433346"}],"replies":[{"embeddable":true,"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/comments?post=27453"}],"version-history":[{"count":1,"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/posts\/27453\/revisions"}],"predecessor-version":[{"id":27454,"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/posts\/27453\/revisions\/27454"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/media\/27452"}],"wp:attachment":[{"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/media?parent=27453"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/categories?post=27453"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ukrmedia.news\/en\/wp-json\/wp\/v2\/tags?post=27453"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}