LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by the end of 2027, according to the latest annual review from the European Court of Auditors. By the end of 2025, EU borrowing stood at €738.9 billion, up from €601.3 billion a year earlier. This is an increase of over 20%. A significant part of the growth comes from financing related to NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors highlighted that future budgets will need to cover rising repayment and interest costs from pandemic-related funding. Interest expenses for non-repayable NextGenerationEU support could total around €93 billion from 2028 to 2034. This estimate assumes full disbursement of available funds. The European Commission has proposed setting aside €24 billion annually during this seven-year period. These funds would prioritize interest payments before reducing the principal debt.
The auditors also identified ongoing deficiencies in how some EU expenditures adhere to funding rules. The estimated error rate for regular budget spending increased to 3.8% in 2025 from 3.6% in 2024. Cohesion policy spending recorded an error rate of 6.6%, while agriculture and environmental funding had a rate of 3.9%. The auditors clarified that such errors do not automatically imply fraud. During 2025, total EU payments amounted to €216.4 billion across the regular budget and recovery mechanisms.
Recovery Fund Progresses Toward Final Payments
The Recovery and Resilience Facility entered its final payment phase in 2026. On Oct. 7, the European Commission announced it had disbursed €450 billion in grants and loans since the start of the programme. This accounted for about 79% of the total funding allocated to the facility. All member states submitted their final payment requests by Sept. 30. Governments had until Aug. 31 to meet the milestones and targets set out in their national recovery plans.
The Commission is reviewing 32 final payment requests worth €123 billion, with disbursements expected by Dec. 31. Separately, auditors examined 37 RRF grant payments made during 2025, finding irregularities in nine cases. These issues related to milestones, targets, public procurement, and state aid rules. By the end of 2025, member states had received €237.5 billion from the €359.9 billion allocated in RRF grants. The remaining funds entered the final implementation stage in 2026.
EU’s Next Budget Will Cover Higher Debt Service Costs
The European Court of Auditors warned that debt guaranteed by the EU budget, mainly through loans, could reach as high as €664 billion by 2027. Repayment of borrowing used for NextGenerationEU grants begins in 2028 and could extend until 2058. The court urged a comprehensive strategy to manage these obligations over the repayment period. Currently, the debt burden influences negotiations on the EU’s 2028-2034 Multiannual Financial Framework and its funding setup.
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 encompass regular programmes, new spending priorities, and the start of repaying NextGenerationEU grants. EU leaders are scheduled to discuss budget financing during a summit in Brussels on Oct. 15-16. The discussions will focus on borrowing costs, recovery fund oversight, and future national contributions, which are key elements of the next financial plan.