LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by the conclusion of 2027, according to the latest annual report from the European Court of Auditors. As of the end of 2025, EU borrowing stood at €738.9 billion, up from €601.3 billion a year earlier, representing an increase of over 20%. A significant portion of this rise is attributable to financing associated with NextGenerationEU and other programs supported by the EU budget.
The European Court of Auditors highlighted that upcoming budgets will need to accommodate rising repayment and interest obligations stemming from the bloc’s pandemic-era financing initiatives. The interest costs for non-repayable assistance through NextGenerationEU could total around €93 billion from 2028 to 2034, assuming the full deployment of the available funding. The European Commission has proposed setting aside €24 billion annually over the seven-year period, with these funds initially covering interest payments before reducing the principal outstanding.
The report also identified ongoing issues in the compliance of some EU spending with established funding rules. The estimated error rate for the regular budget increased to 3.8% in 2025 from 3.6% in 2024. Cohesion expenditure recorded an estimated error rate of 6.6%, while agriculture and environmental spending had an error rate of 3.9%. The auditors clarified that such errors do not automatically imply fraudulent activity. In total, EU payments during 2025 amounted to €216.4 billion, covering both the regular budget and recovery mechanism.
Recovery fund advances toward final payouts
During 2026, the Recovery and Resilience Facility entered its final disbursement phase. The European Commission announced on Oct. 7 that it had allocated €450 billion in grants and loans since the program’s inception, representing roughly 79% of the total fund. Member states submitted their last payment requests by Sept. 30, with all governments required to meet their milestones and targets outlined in their recovery plans by Aug. 31.
Currently, the Commission is reviewing 32 final payment requests totaling €123 billion, with disbursements expected to be completed by Dec. 31. Separate audits of 37 RRF grant payments made in 2025 identified irregularities in nine cases, relating to milestones, targets, public procurement, and state aid requirements. By the end of 2025, member states had received €237.5 billion from an allocated €359.9 billion in RRF grants. The remaining funds were carried over into the program’s final implementation stage during 2026.
Upcoming EU financial cycle faces increased debt servicing costs
The European Court of Auditors indicated that liabilities secured by the EU budget, primarily through loans, could reach as high as €664 billion by 2027. Repayments for borrowing used to fund NextGenerationEU grants will commence in 2028 and extend until 2058. The court emphasized the need for a comprehensive strategy to manage these obligations throughout the repayment period. The growing debt burden is now a key element in negotiations over the EU’s 2028-2034 Multiannual Financial Framework and its overall financing structure.
The European Commission has proposed a long-term budget nearing €2 trillion at current prices for the next seven-year cycle. This framework must encompass regular programs, new spending priorities, and the initiation of repayments for NextGenerationEU grants. EU leaders are scheduled to discuss budget financing at a summit in Brussels on Oct. 15-16. The discussions will focus on borrowing costs, oversight of the recovery fund, and future contributions from member states as integral parts of the bloc’s upcoming financial planning.