LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by the end of 2027, according to the European Court of Auditors in its latest annual report. By the end of 2025, outstanding EU debt had grown by over 20% to €738.9 billion, up from €601.3 billion a year earlier. This rise is largely due to financing for NextGenerationEU and other EU initiatives. These figures highlight debt management as one of the key financial challenges for the bloc as the current budget cycle approaches its final year.
The auditors pointed out that debt servicing will demand more from future EU budgets when repayment of recovery plans begins in 2028. Interest costs on borrowing for non-repayable NextGenerationEU support could total around €93 billion from 2028 to 2034 if all available support is fully distributed. The European Commission has suggested setting aside €24 billion annually during this period. This fund would first cover interest payments and then principal repayments. Ultimately, recovery-related borrowings must be repaid by 2058.
The report also revealed ongoing issues with EU spending controls. The estimated error rate for regular EU budget expenditures increased to 3.8% in 2025 from 3.6% in 2024. This figure remains 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 indicate fraud. In 2025, EU payments totaled €216.4 billion across both the regular budget and recovery facilities.
EU Recovery Fund Approaches Final Payment Stage
The Recovery and Resilience Facility, a core element of NextGenerationEU, entered its final payment phase in 2026. On Oct. 7, the European Commission announced it had disbursed €450 billion in grants and loans since the program’s start. This amount represents about 79% of the total RRF envelope. Member states submitted their final payment requests by Sept. 30, after meeting milestones and targets included in their recovery plans, which had an Aug. 31 deadline.
The Commission is currently reviewing 32 final payment requests worth €123 billion, with payments scheduled for Dec. 31. Auditors separately examined 37 RRF grant payments made in 2025, discovering irregularities in nine cases. These involved issues related to milestones, targets, public procurement, or state aid. The audit also raised concerns about whether some adjustments to national recovery plans had sufficient supporting evidence. By the end of 2025, member states had received €237.5 billion of the €359.9 billion allocated in RRF grants.
Debt Repayment Will Influence Future EU Budget Discussions
The European Court of Auditors warned that liabilities backed by the EU budget—primarily loans—could reach as high as €664 billion by 2027. Borrowings related to NextGenerationEU grants will need repayment between 2028 and 2058. The court has called for a comprehensive strategy to manage these liabilities throughout the repayment period. This issue now plays a crucial role in negotiations for the EU’s 2028-2034 Multiannual Financial Framework, which will set spending priorities, revenue sources, and debt servicing 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 debate spending and financing levels. The audit findings highlight debt costs, recovery fund oversight, and national contributions as key topics in these discussions. EU leaders will discuss budget funding at the Oct. 15-16 summit in Brussels. The next budget cycle must also consider the scheduled start of NextGenerationEU grant repayments in 2028. These obligations will run alongside existing EU programs and other liabilities backed by the budget.