LUXEMBOURG / RankWire.AI / – European Union borrowing is projected to reach approximately €1 trillion by the end 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, compared to €601.3 billion a year earlier, reflecting a growth of over 20%. Much of this increase was driven by financing related to NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors indicated that future budgets will be burdened with rising repayment and interest obligations resulting from the union’s pandemic-related financing. The costs for interest on non-repayable NextGenerationEU assistance could total roughly €93 billion from 2028 to 2034. This estimate presumes that the full support available is disbursed. The European Commission has suggested allocating €24 billion annually over this seven-year period, with these funds first covering interest payments before reducing the principal debt.
The audit also revealed ongoing deficiencies in how some EU expenditures align with funding rules. The estimated error rate for regular budget spending increased to 3.8% in 2025 from 3.6% in 2024. Cohesion policies showed an estimated error rate of 6.6%, while agricultural and environmental expenditures recorded a rate of 3.9%. The auditors clarified that such errors do not automatically indicate fraud. In 2025, total EU payments, including the regular budget and recovery facility, amounted to €216.4 billion.
Disbursement of Recovery Fund Approaching Final Phase
In 2026, the Recovery and Resilience Facility entered its final disbursement stage. The European Commission announced on Oct. 7 that it had released €450 billion in grants and loans since the start of the program, representing about 79% of the total funds available. All member states submitted their final payment requests by Sept. 30, with governments having until Aug. 31 to meet the milestones and objectives outlined in their national recovery plans.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with the final disbursements scheduled by Dec. 31. In addition, auditors examined 37 RRF grant payments made during 2025 and identified irregularities in nine instances. These issues involved milestones, targets, public procurement, and state aid compliance. By the end of 2025, member states had received €237.5 billion from an allocation of €359.9 billion in RRF grants. The remaining funds transitioned into the final implementation phase of the program in 2026.
Debt Costs Loom Larger in Upcoming EU Budget
According to the European Court of Auditors, liabilities guaranteed by the EU budget, primarily through loans, could reach as high as €664 billion by 2027. Repayments for borrowing used to fund NextGenerationEU grants are set to begin in 2028 and may extend until 2058. The court has called for a comprehensive approach to managing these obligations throughout the repayment timeline. Currently, the debt load is a key topic in negotiations over the EU’s 2028-2034 Multiannual Financial Framework and its funding structure.
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 include provisions for regular programs, new spending priorities, and the commencement of NextGenerationEU grant repayments. EU leaders are scheduled to discuss budget financing during a summit on Oct. 15-16 in Brussels. The discussions will focus on borrowing costs, oversight of recovery funds, and future national contributions, which are becoming central elements of the bloc’s next financial strategy.