LUXEMBOURG / RankWire.AI / – European Union borrowing is projected to reach approximately €1 trillion by the close of 2027, based on the latest annual review 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, reflecting a rise of over 20%. The majority of this increase stems from financing related to NextGenerationEU and other initiatives supported by the EU budget.
According to the European Court of Auditors, future fiscal plans will need to accommodate escalating repayment and interest costs resulting from the bloc’s pandemic-era financing. Interest expenses for the non-repayable segment of NextGenerationEU could total roughly €93 billion from 2028 through 2034, assuming the full disbursement of available support. The European Commission has suggested setting aside €24 billion annually over that seven-year span. These funds would initially serve to cover interest payments before reducing the principal amount owed.
The audit revealed persistent shortcomings in the compliance of certain EU expenditures with funding rules. The estimated error rate for regular budget expenditures increased to 3.8% in 2025 from 3.6% in 2024. Cohesion spending incurred an estimated error rate of 6.6%, while agriculture and environmental expenditures recorded a rate of 3.9%. The auditors clarified that such errors do not automatically imply fraudulent activity. During 2025, total EU payments—including the regular budget and recovery facility—amounted to €216.4 billion.
Progress Toward Final Disbursements from the Recovery Fund
In 2026, the Recovery and Resilience Facility entered its final payment phase. On Oct. 7, the European Commission announced it had disbursed €450 billion in grants and loans since the program’s inception, representing roughly 79% of the total allocated funds. Member states submitted their final payment requests by Sept. 30, with deadlines for meeting the milestones and targets outlined in their national recovery plans having been August 31.
Currently, the Commission is evaluating 32 final payment requests totaling €123 billion, with the disbursement deadline set for Dec. 31. During 2025, auditors reviewed 37 RRF grant payments 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 out of the €359.9 billion in total RRF grants allocated. The remaining funds transitioned into the program’s final implementation phase during 2026.
Growing Debt Expenses for the Upcoming EU Budget
The European Court of Auditors forecasted that liabilities guaranteed by the EU budget—primarily through loans—could reach as high as €664 billion by 2027. Repayments for borrowing used in NextGenerationEU grants are scheduled to commence in 2028 and may extend through 2058. The court emphasized the importance of adopting a comprehensive strategy to manage these obligations during the repayment period. The debt load now 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 nearing €2 trillion at current prices for the upcoming seven-year cycle. This framework must incorporate regular programs, new spending priorities, and the initiation of repayments for NextGenerationEU grants. EU leaders are scheduled to discuss budget funding during a summit in Brussels on Oct. 15-16. The discussions will be shaped by rising borrowing costs, controls over the recovery fund, and future contributions from member states, which are becoming central to the bloc’s next financial strategy.