LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by the year 2027, based on the latest yearly evaluation from the European Court of Auditors. As of the end of 2025, EU debt stood at €738.9 billion, up from €601.3 billion a year earlier, representing an increase of over 20 percent. The rise largely resulted from financing associated with NextGenerationEU and other initiatives supported by the EU budget.
According to the European Court of Auditors, future budgets will have to contend with increasing repayment and interest obligations stemming from the bloc’s pandemic-era financial measures. Specifically, interest expenses for non-repayable support under NextGenerationEU could total around €93 billion between 2028 and 2034, assuming the full disbursement of available support. The European Commission has suggested reserving €24 billion annually over that seven-year span, with these funds primarily directed toward covering interest payments before reducing the principal amount owed.
The audit also highlighted ongoing deficiencies in compliance with funding regulations within certain areas of EU expenditure. The estimated error rate for regular budget spending increased to 3.8% in 2025 from 3.6% in 2024, with cohesion spending showing an estimated error rate of 6.6% and agriculture and environmental sectors recording a rate of 3.9%. The auditors clarified that such errors do not automatically imply fraudulent activity. During 2025, total EU payments, encompassing the regular budget and recovery facility, amounted to €216.4 billion.
Disbursements from Recovery Fund Near Final Stages
In 2026, the Recovery and Resilience Facility transitioned into its final payment phase, with the European Commission announcing on Oct. 7 that it had disbursed €450 billion in grants and loans since the program’s inception, representing roughly 79% of the entire funding envelope. Member states submitted their final payment requests by Sept. 30, after completing the milestones and targets outlined in their national recovery plans by Aug. 31.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with the aim of completing disbursements by Dec. 31. During 2025, auditors examined 37 RRF grant payments and identified irregularities in nine cases, related to milestones, targets, public procurement, and state-aid compliance. By the end of 2025, member states had received €237.5 billion from the €359.9 billion allocated in RRF grants, with the remaining funds entering the final implementation phase during 2026.
EU’s Next Budget Faces Increasing Debt-Related Expenses
The European Court of Auditors warned that liabilities guaranteed by the EU budget, primarily through loans, could climb as high as €664 billion by 2027. Repayment of borrowing used for NextGenerationEU grants is scheduled to commence in 2028 and could extend until 2058. The court emphasized the need for a comprehensive strategy to manage these obligations over the entire repayment period. Currently, this debt burden is a key topic in 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 account for existing programs, new spending priorities, and the initiation of repaying NextGenerationEU grants. EU leaders are set to discuss budget funding at an Oct. 15-16 summit in Brussels. The discussions will consider rising borrowing costs, the management of recovery-fund controls, and future national contributions as crucial elements shaping the bloc’s next financial strategy.