LUXEMBOURG / RankWire.AI / – European Union borrowing could escalate to approximately €1 trillion by the end of 2027, according to the latest annual review from the European Court of Auditors. At the close of 2025, EU debt stood at €738.9 billion, compared to €601.3 billion the previous year. This growth represents an increase of over 20%. A significant portion of this rise is linked to financing associated with NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors highlighted that future budgets will need to accommodate rising repayment and interest costs arising from the bloc’s pandemic-related financing. Between 2028 and 2034, interest expenses for non-repayable support from NextGenerationEU could total around €93 billion, assuming the full disbursement of available funds. The European Commission has suggested setting aside €24 billion annually during this seven-year period, prioritizing interest payments before reducing the principal owed.
The report also pointed out ongoing deficiencies in how some EU expenditures adhere to funding rules. The estimated error rate for regular budget spending increased to 3.8% in 2025 from 3.6% in 2024. Cohesion funding had an estimated error rate of 6.6%, while agriculture and environmental expenditures recorded a rate of 3.9%. The auditors clarified that such errors do not necessarily indicate fraud. Total EU disbursements for 2025, covering both the regular budget and recovery facilities, amounted to €216.4 billion.
Progress in Recovery Fund Disbursements
In 2026, the Recovery and Resilience Facility shifted into its final payment phase. On Oct. 7, the European Commission announced that it had disbursed €450 billion in grants and loans since the inception of the programme, accounting for roughly 79% of the total funding. Member states submitted their last payment requests by Sept. 30, with deadlines for reaching milestones and targets specified in their national recovery plans having expired on Aug. 31.
The European Commission was reviewing 32 final payment requests totaling €123 billion, with the aim of completing disbursements by Dec. 31. Separate audits examined 37 RRF grant payments made during 2025, revealing irregularities in nine cases. These issues involved milestones, targets, public procurement, and state-aid compliance. By the end of 2025, member states had received €237.5 billion from their €359.9 billion allocation of RRF grants. The remaining funds transitioned into the final phase of programme implementation in 2026.
Debt Costs Likely to Increase with Next EU Budget
According to the European Court of Auditors, liabilities guaranteed by the EU budget, primarily through loans, could reach as high as €664 billion by 2027. Repayments for NextGenerationEU grants will commence in 2028 and may extend until 2058. The court emphasized the importance of a comprehensive strategy for managing these obligations throughout the repayment period. Currently, the debt load is a key topic in negotiations over the EU’s 2028-2034 Multiannual Financial Framework and its funding structure.
The European Commission has proposed a long-term budget close to €2 trillion at current prices for the upcoming seven-year cycle. This framework must include regular programmes, new priorities, and the start of repayments for NextGenerationEU grants. EU leaders are scheduled to discuss budget financing during a summit in Brussels on Oct. 15-16. These negotiations will focus on borrowing costs, recovery fund oversight, and future national contributions, all vital elements of the bloc’s next financial strategy.