LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by the end of 2027, according to the European Court of Auditors’ latest annual report. By the end of 2025, outstanding EU debt increased over 20% to €738.9 billion, up from €601.3 billion a year earlier. This surge reflects funding for NextGenerationEU and other EU initiatives. These figures highlight debt management as a key financial concern for the bloc as the current budget cycle approaches its final year.
The auditors warned that debt servicing will exert greater pressure on future EU budgets once repayment of recovery plans starts in 2028. Interest costs on borrowing for non-repayable support through NextGenerationEU could total about €93 billion from 2028 to 2034 if all available support is fully utilized. The European Commission has proposed reserving €24 billion annually during that period, primarily to cover interest and later principal repayments. Ultimately, recovery-related borrowings must be repaid by 2058.
The report also identified ongoing issues with EU spending oversight. The estimated error rate for regular EU budget expenditures increased slightly to 3.8% in 2025 from 3.6% in 2024, remaining above the auditors’ 2% materiality threshold. Cohesion spending had an estimated error rate of 6.6%, while agriculture and environmental expenditures reached 3.9%. The European Court of Auditors emphasized that spending errors do not automatically imply fraud. In 2025, EU payments totaled €216.4 billion across both the regular budget and recovery mechanisms.
EU Recovery Fund Enters Final Disbursement Phase
In 2026, the Recovery and Resilience Facility, the core element of NextGenerationEU, transitioned into its final payment stage. On Oct. 7, the European Commission announced it had disbursed €450 billion in grants and loans since inception, representing roughly 79% of the total RRF budget. Member states submitted their last payment requests by Sept. 30, having met an Aug. 31 deadline for completing milestones outlined in their recovery plans.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with payments scheduled for by Dec. 31. During 2025, auditors examined 37 RRF grant disbursements and found irregularities in nine cases, involving issues like milestones, targets, public procurement, or state aid compliance. They also raised questions about whether some modifications to national recovery plans had adequate supporting evidence. By the end of 2025, member states had received €237.5 billion of the €359.9 billion allocated in RRF grants.
Debt Repayments to Influence Upcoming EU Budget Negotiations
The European Court of Auditors estimates that liabilities backed by the EU budget, primarily loans, could reach up to €664 billion by 2027. Repayments for borrowing related to NextGenerationEU grants are due from 2028 through 2058. The court has called for a comprehensive strategy to manage these liabilities throughout their repayment period. This issue is now central to negotiations over the EU’s 2028-2034 Multiannual Financial Framework, which will shape priorities, revenues, and debt service allocations for the upcoming seven-year cycle.
The European Commission has proposed a long-term budget nearing €2 trillion at current prices, as member states discuss spending and funding levels. The audit results highlight debt costs, recovery fund oversight, and national contributions as key topics in these discussions. EU leaders will meet to address budget financing at an Oct. 15-16 summit in Brussels. The next multiannual framework must also factor in the scheduled start of NextGenerationEU grant repayments in 2028, which will run concurrently with other EU programmes and liabilities supported by the budget.