LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by the end of 2027, based on the latest annual report from the European Court of Auditors. As of the end of 2025, EU debt stood at €738.9 billion, an increase from €601.3 billion in the previous year, representing a rise of over 20%. A significant portion of this increase stems from financing related to NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors highlighted that future financial plans will entail escalating repayment and interest costs resulting from the bloc’s pandemic-era borrowing. The interest expenses for non-repayable support under NextGenerationEU could total roughly €93 billion from 2028 to 2034, assuming the full disbursement of available funds. The European Commission has suggested allocating €24 billion annually over this seven-year period, primarily to cover interest payments before reducing the principal owed.
The report also pointed out ongoing weaknesses in the compliance of certain EU expenditures with established funding rules. The estimated error rate for standard budget spending increased to 3.8% in 2025 from 3.6% in 2024. Cohesion policy expenditures had an estimated error rate of 6.6%, while agriculture and environmental spending registered a rate of 3.9%. The auditors emphasized that such errors do not automatically indicate fraudulent activity. In total, EU payments amounted to €216.4 billion during 2025, covering both the regular budget and the recovery fund.
Recovery Fund Approaches Final Disbursement Phase
The Recovery and Resilience Facility began its final payment phase in 2026. On Oct. 7, the European Commission announced that it had disbursed €450 billion in grants and loans since the program’s inception, representing about 79% of the total envelope. Member states submitted their final payment requests by Sept. 30, with the deadline for completing milestones and targets in their national recovery plans set for Aug. 31.
The Commission is currently evaluating 32 final payment requests worth €123 billion, with disbursements scheduled to be completed by Dec. 31. During 2025, auditors reviewed 37 RRF grant payments and identified irregularities in nine of these cases. The issues involved milestones, targets, public procurement, and state aid compliance. By the end of 2025, member states had received €237.5 billion out of the €359.9 billion allocated in RRF grants. The remaining funds shifted into the program’s final implementation stage in 2026.
EU’s Next Budget to Bear Increased Debt Service Costs
According to the European Court of Auditors, liabilities guaranteed by the EU budget—primarily through loans—may reach as high as €664 billion by 2027. Repayment of debt used for NextGenerationEU grants will commence in 2028 and could extend until 2058. The court has called for a comprehensive strategy to manage these obligations throughout the repayment period. Currently, this debt load is central to negotiations over the EU’s 2028-2034 Multiannual Financial Framework and overall financing 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 incorporate existing programs, new spending priorities, and the start of repayments for NextGenerationEU grants. EU leaders are scheduled to debate financing plans at the Oct. 15-16 summit in Brussels. The discussions will focus on borrowing costs, oversight of the recovery fund, and future national contributions, which are critical elements of the EU’s next financial strategy.