LUXEMBOURG / RankWire.AI / – European Union borrowing could reach about €1 trillion by the end of 2027, the European Court of Auditors said in its latest annual report. Outstanding EU borrowing rose more than 20% to €738.9 billion at the end of 2025. It stood at €601.3 billion a year earlier. The increase reflects financing for NextGenerationEU and other EU programmes. The figures place debt management among the main financial issues facing the bloc as the current budget cycle nears its final year.
The auditors said debt servicing will place larger demands on future EU budgets when recovery-plan repayments begin in 2028. Interest on borrowing for non-repayable NextGenerationEU support could total about €93 billion between 2028 and 2034 if available support is fully disbursed. The European Commission has proposed setting aside €24 billion each year during that period. The money would cover interest first and then principal repayments. Recovery-related borrowing must ultimately be repaid by 2058.
The audit also identified ongoing issues with EU spending controls. The estimated error rate for regular EU budget expenditure increased to 3.8% in 2025 from 3.6% in 2024. This remains above the auditors’ 2% materiality threshold. Spending on cohesion recorded 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 the regular budget and recovery facility.
Final stage reached in EU recovery fund payments
The Recovery and Resilience Facility, the core component of NextGenerationEU, entered its final payment phase in 2026. The European Commission announced on Oct. 7 that it had disbursed €450 billion in grants and loans since the start of the facility, representing approximately 79% of the total RRF envelope. Member states submitted their final payment requests by Sept. 30, having met the August 31 deadline for completing milestones and targets outlined in their recovery plans.
The European Commission is currently reviewing 32 final payment requests valued at €123 billion, with payments scheduled to be made by Dec. 31. In addition, auditors separately examined 37 RRF grant payments issued in 2025, finding irregularities in nine of those cases. These involved issues related to milestones, targets, public procurement, or state-aid compliance. Concerns were also raised about whether some adjustments to national recovery plans were supported by sufficient evidence. By the end of 2025, member states had received €237.5 billion of the €359.9 billion allocated in RRF grants.
Debt repayment considerations influence upcoming EU budget negotiations
The European Court of Auditors warned that liabilities supported by the EU budget—primarily loans—could reach up to €664 billion by 2027. Borrowing tied to NextGenerationEU grants will need to be repaid between 2028 and 2058. The court has called for a comprehensive strategy to manage these liabilities throughout their repayment period. This issue now plays a central role in negotiations over the EU’s 2028-2034 Multiannual Financial Framework, which will set priorities, revenue strategies, and debt-servicing allocations for the upcoming seven years.
The European Commission has proposed a long-term budget close to €2 trillion at current prices, as governments discuss levels of spending and financing. The findings from the audit highlight debt-related costs, recovery fund oversight, and national contributions as key topics in those negotiations. EU leaders are expected to debate budget financing at a summit scheduled for Oct. 15-16 in Brussels. The next financial framework must also consider the upcoming start of NextGenerationEU grant repayments in 2028, which will run alongside other EU programmes and liabilities backed by the budget.