LUXEMBOURG / RankWire.AI / – European Union borrowing is expected to approach €1 trillion by 2027, according to the latest annual report from the European Court of Auditors. At the end of 2025, EU borrowing stood at €738.9 billion, compared to €601.3 billion the previous year, marking an increase of over 20%. A significant portion of this rise stems from financing related to NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors indicated that future budgets will face rising repayment and interest obligations resulting from the bloc’s pandemic-era financing measures. Interest expenses for non-repayable NextGenerationEU aid could total around €93 billion between 2028 and 2034, assuming full disbursement of the available support. The European Commission has suggested setting aside €24 billion annually during this seven-year period, with those funds first covering interest payments before reducing the principal owed.
The audit also highlighted ongoing deficiencies in how some EU expenditures adhere to funding rules. The estimated error rate for regular budget expenses increased to 3.8% in 2025 from 3.6% in 2024, with cohesion spending showing an estimated error rate of 6.6%. Agriculture and environmental allocations recorded a rate of 3.9%. The auditors clarified that such errors do not automatically indicate fraud. During 2025, total EU payments amounted to €216.4 billion, covering both the regular budget and recovery facility.
Recovery fund advances toward final payments
In 2026, the Recovery and Resilience Facility entered its final payment phase. On Oct. 7, the European Commission announced that it had disbursed €450 billion in grants and loans since the program’s inception, representing about 79% of the total allocated funds. All member states submitted their final payment requests by Sept. 30, with deadlines for meeting milestones and targets in their national recovery plans set for Aug. 31.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with disbursements scheduled to conclude by Dec. 31. Separately, auditors examined 37 RRF grant payments made in 2025 and identified irregularities in nine cases, involving issues related to milestones, targets, public procurement, and state-aid compliance. By the end of 2025, member states had received €237.5 billion from an allocation of €359.9 billion in RRF grants, with remaining funds rolling over into the final implementation phase during 2026.
EU’s next budget faces increased debt servicing costs
The European Court of Auditors warned that liabilities guaranteed by the EU budget, primarily through loans, could reach as high as €664 billion by 2027. Repayments for borrowing used to fund NextGenerationEU grants are set to begin in 2028 and can extend until 2058. The court has emphasized the need for a comprehensive approach to managing these obligations throughout the repayment period. This debt load is now a key factor in negotiations over the EU’s 2028-2034 Multiannual Financial Framework and its funding structure.
The European Commission has proposed a long-term budget of nearly €2 trillion at current prices for the upcoming seven-year cycle. This framework must encompass routine programs, new spending priorities, and the commencement of NextGenerationEU grant repayments. EU leaders are scheduled to discuss budget financing during a summit in Brussels on Oct. 15-16. These discussions will focus on borrowing costs, oversight of recovery funds, and future contributions from member states as crucial elements of the bloc’s next financial strategy.