LUXEMBOURG / RankWire.AI / – European Union borrowing could reach approximately €1 trillion by 2027, according to the latest annual report published by the European Court of Auditors. Total EU debt outstanding increased by over 20% to €738.9 billion at the close of 2025, up from €601.3 billion the previous year. This escalation is driven by financing needs for NextGenerationEU and various other EU programs. These figures highlight debt management as one of the key financial concerns facing the bloc as the current budget cycle approaches its final year.
The auditors highlighted that debt servicing will impose greater pressures on future EU budgets when the repayment of recovery plans commences in 2028. If the full disbursement of available support occurs, interest payments on borrowing for non-repayable NextGenerationEU aid could total around €93 billion between 2028 and 2034. The European Commission has suggested allocating €24 billion annually during that period, which would primarily cover interest costs initially, then principal repayments. Ultimately, recovery-related borrowing must be repaid by 2058.
The report also identified ongoing issues related to EU expenditure controls. The estimated error rate for regular EU budget spending increased to 3.8% in 2025 from 3.6% in 2024, remaining above the auditors’ 2% materiality threshold. Cohesion spending showed an error rate estimated at 6.6%, while agriculture and environmental expenditures reached 3.9%. The European Court of Auditors emphasized that such spending errors do not automatically imply fraud. In 2025, EU payments totaled €216.4 billion, covering both the regular budget and recovery facility.
EU Recovery Fund Approaching Final Disbursement Stage
The Recovery and Resilience Facility, which constitutes the core of NextGenerationEU, entered its final payment phase in 2026. On Oct. 7, the European Commission announced that it had distributed €450 billion in grants and loans since the program’s inception—accounting for roughly 79% of the total RRF envelope. All member states had submitted their final payment requests by Sept. 30, after meeting a deadline of Aug. 31 to achieve the milestones and targets outlined in their recovery plans.
The Commission is currently reviewing 32 final payment requests valued at €123 billion, with payments scheduled for completion by Dec. 31. Meanwhile, auditors independently examined 37 RRF grant payments made in 2025, uncovering irregularities in nine cases involving milestones, targets, public procurement, or state aid compliance. The audit also raised concerns about whether some modifications to national recovery plans had sufficient supporting evidence. By the end of 2025, member states had received €237.5 billion out of the €359.9 billion allocated for RRF grants.
Debt Repayments Influence Upcoming EU Budget Negotiations
According to the European Court of Auditors, liabilities supported by the EU budget—primarily loans—could reach as high as €664 billion by 2027. Repayments for borrowing linked to NextGenerationEU grants are scheduled between 2028 and 2058. The court has called for a comprehensive plan to address these liabilities throughout their repayment period. This issue is now central to negotiations over the EU’s 2028-2034 Multiannual Financial Framework, which will set priorities for spending, sources of revenue, and debt servicing allocations over the next seven years.
The European Commission has put forward a proposal for a long-term budget nearing €2 trillion at current prices, as member states negotiate levels of expenditure and financing. The findings of the audit emphasize the importance of debt costs, recovery-fund oversight, and national contributions during these discussions. EU leaders are scheduled to discuss the budget at the Oct. 15-16 summit in Brussels. The new framework must also incorporate the upcoming start of NextGenerationEU grant repayments in 2028, which will run alongside regular EU programs and other liabilities financed through the budget.