LUXEMBOURG / RankWire.AI / – European Union debt is projected to reach approximately €1 trillion by the end of 2027, based on the latest annual review from the European Court of Auditors. As of the end of 2025, EU borrowing stood at €738.9 billion, compared to €601.3 billion the previous year, representing an increase of over 20%. Much of this surge stems from funding associated with NextGenerationEU and other initiatives supported by the EU budget.
The European Court of Auditors highlighted that upcoming budgets will need to cover mounting repayment and interest expenses resulting from the bloc’s pandemic-related financing efforts. Specifically, interest payments for non-repayable support from NextGenerationEU could total around €93 billion from 2028 to 2034. This forecast presumes the full disbursement of available support. The European Commission has suggested setting aside €24 billion annually during this seven-year span, prioritizing interest payments before reducing the principal balance.
The audit revealed ongoing deficiencies in the compliance of certain EU expenditures with established funding rules. The estimated error rate for regular budget expenditures increased to 3.8% in 2025 from 3.6% in 2024. Cohesion spending showed an estimated error rate of 6.6%, while agriculture and environmental expenditures recorded a rate of 3.9%. The auditors clarified that such errors do not automatically imply fraud. In 2025, total EU disbursements reached €216.4 billion, covering both the regular budget and recovery facility.
Recovery Fund Approaching Final Disbursement Stage
The Recovery and Resilience Facility entered 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, accounting for roughly 79% of the total allocated amount. Member states had until Sept. 30 to submit their final payment requests, with milestones and targets outlined in their national recovery plans due by Aug. 31.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with expected disbursements by Dec. 31. Additionally, auditors analyzed 37 RRF grant payments made during 2025, identifying irregularities in nine cases related to milestones, targets, public procurement, and state-aid rules. By the end of 2025, member states had received €237.5 billion from an allocated €359.9 billion in RRF grants. The remaining funds transitioned into the program’s final implementation phase in 2026.
European Debt Set to Increase with 2028 Budget
The European Court of Auditors warned that liabilities backed by the EU budget, primarily through loans, could reach as high as €664 billion by 2027. Repayments for borrowing used for NextGenerationEU grants are scheduled to begin in 2028 and could extend until 2058. The court emphasized the importance of adopting a comprehensive management strategy for these obligations over the repayment period. Currently, this debt load is a key factor in negotiations over the EU’s 2028-2034 Multiannual Financial Framework and its 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 regular programs, new spending priorities, and the initiation of repayments for NextGenerationEU grants. EU leaders are scheduled to discuss budget financing during a summit in Brussels on Oct. 15-16. These discussions will be crucial as borrowing costs, recovery fund oversight, and future contributions are expected to play central roles in shaping the bloc’s next financial plan.