LUXEMBOURG / RankWire.AI / – European Union borrowing is expected to approach approximately €1 trillion by the year 2027, according to the latest annual review from the European Court of Auditors. By the end of 2025, EU borrowing had totaled €738.9 billion, up from €601.3 billion a year earlier. This represents a rise of over 20%. Much of this increase stems from financing linked to NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors indicated that future budgets will need to cover increasing repayment and interest expenses resulting from the bloc’s pandemic-related financing. Interest payments for non-repayable support under NextGenerationEU could reach about €93 billion from 2028 to 2034. This estimate assumes that the full amount of available support is disbursed. The European Commission has suggested setting aside €24 billion annually over this seven-year period. These funds would first be used to pay interest before reducing the principal debt outstanding.
The audit also highlighted persistent issues regarding adherence to funding rules in some areas of EU expenditure. The estimated error rate for regular budget spending increased to 3.8% in 2025 from 3.6% in 2024. Cohesion policy spending showed an error rate of 6.6%, while agriculture and environmental spending registered a rate of 3.9%. The auditors clarified that such errors do not automatically imply fraud. Total EU payments in 2025 amounted to €216.4 billion, covering both the regular budget and the recovery facility.
Recovery Fund Approaches Final Disbursement Stage
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 program’s inception. This sum accounts for roughly 79% of the total funds available under the facility. All member states submitted their final payment requests by Sept. 30, with deadlines for milestones and targets in their national recovery plans ending on Aug. 31.
The Commission is reviewing 32 final payment requests valued at €123 billion, with disbursements expected to be completed by Dec. 31. During 2025, auditors examined 37 grant payments made through the RRF 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 a total of €359.9 billion allocated in RRF grants. Remaining funds moved into the program’s final implementation phase during 2026.
EU’s Next Budget Could Suffer from Increased Debt Expenses
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. The repayment of debt used for NextGenerationEU grants begins in 2028 and may extend until 2058. The court has called for a comprehensive strategy to manage these obligations throughout the repayment timeline. Currently, this debt burden influences negotiations concerning the EU’s 2028-2034 Multiannual Financial Framework and its overall financing structure.
The European Commission has proposed a long-term budget of nearly €2 trillion at current prices for the upcoming seven-year cycle. This budget must incorporate funding for existing programs, new priorities, and the start of repayments for NextGenerationEU grants. EU leaders plan to discuss budget financing at an Oct. 15-16 summit in Brussels. As borrowing costs rise, and controls over recovery funds and national contributions become more prominent, these discussions will be central to shaping the bloc’s financial future.