LUXEMBOURG / RankWire.AI / – European Union borrowing is forecasted to reach approximately €1 trillion by the end of 2027, according to the latest annual review from the European Court of Auditors. As of the end of 2025, EU borrowing amounted to €738.9 billion, up from €601.3 billion one year earlier, reflecting a rise of over 20%. Much of this increase stems from financing associated with NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors highlighted that upcoming budgets will need to handle escalating repayment and interest obligations resulting from the bloc’s pandemic-era financial support. Interest expenses for non-repayable assistance under NextGenerationEU are projected to total around €93 billion from 2028 through 2034. This estimate assumes full utilization of the available aid. The European Commission has proposed setting aside €24 billion annually over this seven-year span, with funds primarily directed toward covering interest before reducing the principal balance.
The audit revealed ongoing issues in how some EU expenditures adhere to funding rules. The estimated error rate for the regular budget increased slightly from 3.6% in 2024 to 3.8% in 2025. Cohesion policy spending reported an estimated error rate of 6.6%, while agriculture and environmental investments had a rate of 3.9%. The auditors clarified that such errors do not automatically imply fraud. During 2025, EU payments totaled €216.4 billion, combining regular budget and recovery facility disbursements.
Recovery fund approaches final disbursement stage
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 roughly 79% of the total fund. Member states submitted their final requests for payments by Sept. 30, having until Aug. 31 to meet the milestones and targets outlined in their national recovery plans.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with disbursements expected by Dec. 31. Auditors also examined 37 RRF grant payments made during 2025 and identified irregularities in nine cases. These issues involved milestones, targets, public procurement, and state aid requirements. By the end of 2025, member states had received €237.5 billion from a total of €359.9 billion allocated in grants. The remaining funds transitioned into the final implementation phase of the program in 2026.
EU’s upcoming budget 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 may extend until 2058. The court emphasized the need for a comprehensive strategy to manage these obligations throughout the repayment period. Currently, the debt load is a key element in negotiations concerning the EU’s 2028-2034 Multiannual Financial Framework and its overall financing structure.
The European Commission has put forward a long-term budget proposal nearly €2 trillion at current prices for the next seven-year cycle. This framework must accommodate existing programs, new expenditure priorities, and the start of repayments for NextGenerationEU grants. EU leaders are scheduled to discuss the budget financing at an Oct. 15-16 summit in Brussels. The discussions will focus on borrowing costs, controls over recovery fund expenditures, and future contributions from member states, which are critical factors shaping the EU’s financial outlook.