LUXEMBOURG / RankWire.AI / – European Union borrowing may reach nearly €1 trillion by 2027, according to the European Court of Auditors in its latest annual report. Outstanding EU debt increased over 20% to €738.9 billion at the close of 2025, up from €601.3 billion a year earlier. This rise reflects funding for NextGenerationEU and other EU initiatives. The figures highlight debt management as a key financial challenge for the bloc as the current budget cycle approaches its final year.
The auditors emphasized that debt servicing will impose greater demands on future EU budgets as repayment of recovery plans begins in 2028. Interest on borrowing for non-repayable NextGenerationEU support could total around €93 billion between 2028 and 2034 if all available aid is fully disbursed. The European Commission has proposed allocating €24 billion annually during that period, primarily to cover interest expenses before principal repayments. Ultimately, recovery-related borrowing is expected to be repaid by 2058.
The report also identified ongoing issues with EU expenditure controls. The estimated error rate for regular EU budget spending rose to 3.8% in 2025 from 3.6% in 2024, remaining above the auditors’ 2% materiality threshold. Cohesion spending had an estimated error rate of 6.6%, while agriculture and environmental spending reached 3.9%. The European Court of Auditors clarified that spending errors do not automatically imply fraud. In 2025, EU payments totaled €216.4 billion across the regular budget and recovery facility.
EU Recovery Fund Reaches Final Phase of Payments
The Recovery and Resilience Facility, the primary element of NextGenerationEU, entered its final payment stage in 2026. On Oct. 7, the European Commission announced it had disbursed €450 billion in grants and loans since the program’s inception, representing about 79% of the RRF envelope. Member states submitted their last payment requests by Sept. 30 after meeting the Aug. 31 deadline to fulfill milestones and targets outlined in their recovery plans.
The Commission is currently reviewing 32 final payment requests totaling €123 billion, with payments scheduled for Dec. 31. Separately, auditors examined 37 RRF grant payments made in 2025 and found irregularities in nine cases related to milestones, targets, public procurement, or state-aid rules. The audit also raised concerns over whether some modifications to national recovery plans were backed 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 Repayments Influence Future EU Budget Talks
The European Court of Auditors stated that liabilities supported by the EU budget, primarily loans, could reach as high as €664 billion by 2027. Repayment of borrowing linked to NextGenerationEU grants is scheduled from 2028 through 2058. The court urged the development of a comprehensive strategy to manage these liabilities throughout the repayment period. This issue is now central to negotiations over the EU’s 2028-2034 Multiannual Financial Framework, which will shape spending priorities, revenue sources, and debt service allocations for the upcoming seven-year cycle.
The European Commission has proposed a long-term budget close to €2 trillion at current prices, as member states debate spending and financing levels. The audit findings emphasize debt costs, recovery fund oversight, and national contributions as focal points of these negotiations. EU leaders are scheduled to discuss budget financing during the Oct. 15-16 summit in Brussels. The next budget framework must also incorporate the upcoming start of NextGenerationEU grant repayments in 2028, which will operate alongside regular EU programs and other budget-backed commitments.