LUXEMBOURG / RankWire.AI / – European Union borrowing is expected to reach approximately €1 trillion by the end of 2027, according to the most recent annual evaluation from the European Court of Auditors. As of the end of 2025, EU borrowing had climbed to €738.9 billion, compared to €601.3 billion at the same point in the previous year. This reflects an increase of over 20%. A significant portion of this growth stemmed from financing linked to NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors highlighted that future fiscal plans will have to contend with rising repayment and interest obligations stemming from the bloc’s pandemic-related financing. Specifically, interest payments for non-repayable support from NextGenerationEU could total around €93 billion during the period from 2028 to 2034. This projection presumes that the full amount of available support is disbursed. The European Commission has recommended setting aside €24 billion annually for these seven years. These funds would initially cover interest expenses before reducing the principal debt owed.
The audit further identified ongoing deficiencies in the compliance of certain EU expenditures with established funding rules. The estimated error rate for regular budget expenses increased to 3.8% in 2025 from 3.6% in 2024. Cohesion policy spending registered an estimated error rate of 6.6%, whereas agriculture and environmental investments reported a rate of 3.9%. The auditors clarified that such errors do not necessarily indicate fraud. In total, EU payments amounted to €216.4 billion across both the regular budget and recovery facilities in 2025.
Recovery Fund Approaching Final Disbursement Phase
In 2026, the Recovery and Resilience Facility moved into its final payment stage. On Oct. 7, the European Commission announced that it had disbursed €450 billion in grants and loans since the program’s inception, representing roughly 79% of the total allocated funds. Member states had submitted their last payment requests by Sept. 30, with the deadline for meeting milestones and targets outlined in their recovery plans set for Aug. 31.
The Commission was reviewing 32 final payment requests totaling €123 billion, with the last disbursements scheduled for Dec. 31. In addition, auditors reviewed 37 RRF grant payments made in 2025 and identified irregularities in nine of these. Issues involved milestones, targets, public procurement, and state-aid compliance. By the close of 2025, member states had received €237.5 billion out of the €359.9 billion allocated in grants. The remaining funds transitioned into the program’s final implementation phase during 2026.
EU’s Next Budget Faces Elevated Debt Service Expenses
According to the European Court of Auditors, liabilities guaranteed by the EU budget—primarily via loans—could reach as high as €664 billion by 2027. Repayments for borrowing used to finance NextGenerationEU grants are scheduled to start in 2028 and may extend until 2058. The court emphasized the need for a comprehensive strategy to manage these obligations throughout the repayment timeline. Currently, this 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 cover regular programs, new spending priorities, and the commencement of NextGenerationEU grant repayments. EU leaders are set to discuss financing arrangements at the summit scheduled for Oct. 15-16 in Brussels. The discussions will focus on borrowing costs, oversight of recovery fund allocations, and future national contributions, all of which are central to the bloc’s next financial plan.