LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by the end of 2027, based on the latest annual review from the European Court of Auditors. At the close of 2025, EU borrowing stood at €738.9 billion, rising from €601.3 billion the previous year, representing an increase of over 20%. Much of this surge was driven by funding related to NextGenerationEU and other initiatives supported by the EU budget.
According to the European Court of Auditors, upcoming budgets will face increasing obligations for repayment and interest stemming from the bloc’s pandemic-era financial measures. The interest costs associated with non-repayable support from NextGenerationEU could total around €93 billion between 2028 and 2034, assuming the full disbursement of available support. The European Commission has proposed setting aside €24 billion annually during that seven-year period, with these funds initially covering interest payments before reducing the principal amount owed.
The audit highlighted ongoing deficiencies in how certain EU expenditures align with funding regulations. The estimated error rate for regular budget spending increased to 3.8% in 2025 from 3.6% in 2024. Cohesion funding experienced an estimated error rate of 6.6%, while agriculture and environmental spending recorded a rate of 3.9%. The auditors emphasized that such errors do not automatically indicate fraudulent activity. Total EU disbursements during 2025, including payments from the regular budget and recovery fund, amounted to €216.4 billion.
Recovery fund advances toward concluding disbursements
In 2026, the Recovery and Resilience Facility entered its final payment phase. The European Commission announced on Oct. 7 that it had disbursed €450 billion in grants and loans since the programme’s inception, accounting for roughly 79% of the total envelope. Member states submitted their final payment requests by Sept. 30, with all governments required to meet their milestones and targets outlined in their national recovery plans by Aug. 31.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with disbursements scheduled to conclude by Dec. 31. In addition, auditors examined 37 RRF grant payments made during 2025 and identified 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 an allocation of €359.9 billion in RRF grants. Remaining funds were allocated to the programme’s final implementation phase during 2026.
EU’s upcoming budget faces increased debt servicing costs
The European Court of Auditors projected 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 commence in 2028 and could extend until 2058. The court called for a comprehensive strategy to manage these commitments over the repayment period. This growing debt load is now a key topic in negotiations surrounding the EU’s 2028-2034 Multiannual Financial Framework and its overall financing approach.
The European Commission has put forward a long-term budget proposal of nearly €2 trillion at current prices for the upcoming seven-year cycle. This framework must incorporate regular programmes, new expenditure 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. As borrowing costs, recovery fund oversight, and future national contributions become focal points, these discussions will shape the EU’s fiscal strategy for the coming years.