EU borrowing could reach EUR 1 trillion in 2027, putting pressure on future budgets

The nominal value of the European Union’s outstanding borrowing reached EUR 738.9 billion at the end of 2025 and could rise to approximately EUR 1 trillion by 2027, the European Court of Auditors warns. Interest payments alone for the non-repayable component of NextGenerationEU could reach approximately EUR 93 billion between 2028 and 2034, in a scenario assuming that all available support is paid out.

Outstanding European Union borrowing could reach approximately EUR 1 trillion by 2027, after increasing by more than 20% in a single year and reaching EUR 738.9 billion at the end of 2025, according to the European Court of Auditors. The increase is turning the cost of debt into an issue for future European budgets, particularly because repayment of borrowing contracted for the non-repayable component of NextGenerationEU must begin in 2028 and continue until no later than 2058.

In brief
EU outstanding borrowing reached EUR 738.9 billion at the end of 2025, up from EUR 601.3 billion a year earlier.

The Court estimates that this figure could reach approximately EUR 1 trillion by the end of 2027.

Interest costs for NextGenerationEU non-repayable support could reach approximately EUR 93 billion between 2028 and 2034 if all available support is paid out.

The Commission proposes setting aside EUR 24 billion annually in the future 2028–2034 budget to pay interest and repay the principal associated with this debt.

The Court is calling on the Commission to develop a comprehensive strategy for managing and repaying NGEU debt through 2058. The Commission has accepted the recommendation, with implementation due by the end of 2027.

The expansion of European debt is the result of the Commission’s transformation into a large-scale issuer on financial markets. The EU borrows to finance programmes such as NextGenerationEU, financial support provided to certain countries and other instruments for which the European budget or beneficiary countries guarantee repayment.

At the end of 2025, the total nominal value of outstanding borrowing was EUR 738.9 billion, compared with EUR 601.3 billion in 2024. Of the 2025 total, EUR 36.8 billion consisted of EU bills with maturities of less than one year, used for liquidity management. Long-term borrowing amounted to EUR 702.1 billion.

The Court estimates that, based on the programmes and operations planned, outstanding borrowing could reach approximately EUR 1 trillion by the end of the current financial framework in 2027. This figure is a forecast, not debt that has already accumulated.

NextGenerationEU is one of the main explanations for the increase. Under this programme, the Commission borrows on the markets both for grants and non-repayable contributions and for loans provided to Member States through the Recovery and Resilience Facility.

The distinction between the two components is important for taxpayers. The costs of loans passed on to countries through the RRF loan component are borne by the beneficiary countries under their agreements. By contrast, debt contracted for NextGenerationEU grants and other forms of non-repayable support must be repaid from the Union budget.

Repayment of this component must begin in 2028 and end no later than 2058. EU legislation requires a steady and predictable reduction in liabilities, while annual repayment of principal is capped at 7.5% of the maximum amount of NGEU non-repayable support, equivalent to approximately EUR 31.6 billion per year.

However, the EU does not have to repay all bonds exactly when they mature. The Commission can refinance part of the debt by issuing new bonds. This refinancing allows repayment to be spread over several decades, but leaves the European budget exposed to developments in interest rates on financial markets.

This exposure has already become more costly than estimated when NextGenerationEU was created. For the current 2021–2027 financial framework, EUR 14.9 billion had initially been earmarked for interest and coupon payments on NGEU borrowing. The Court now estimates that total financing costs for the non-repayable component could reach EUR 28.3 billion, approximately twice the initial forecast.

The difference is largely linked to changing conditions on financial markets. Estimates made in 2020 assumed much lower borrowing costs, while the subsequent rise in interest rates increased the marginal cost of European financing.

Pressure will continue under the future financial framework. Based on information from the Commission, the Court estimates that interest on the non-repayable component of NGEU could total approximately EUR 93 billion between 2028 and 2034 if the support is paid out in full. This is a forecast dependent on the final volume of borrowing, interest-rate developments and the way the debt is refinanced, not an already established bill.

To manage these obligations, the Commission has proposed that the future multiannual budget provide a fixed amount of EUR 24 billion per year, in current prices, for servicing NGEU debt associated with non-repayable support. This amount would cover both interest and principal repayments.

Under the Commission’s proposed architecture, interest would have priority. The amount remaining from the annual EUR 24 billion ceiling would be used to repay principal. If interest is higher than anticipated, less principal could be repaid that year and more debt would have to be refinanced. If interest rates fall, a larger share of the annual amount could be used to reduce principal.

The Commission considers that this approach provides predictability for the European budget and Member States’ contributions and acts as a natural protection against interest-rate fluctuations. The Court notes, however, that a refinancing-based strategy may generate higher total interest costs over the entire period through 2058 than options in which principal is repaid more quickly.

The EUR 24 billion per year does not yet represent a definitively approved expenditure. It forms part of the Commission’s proposal for the 2028–2034 multiannual financial framework, which must be negotiated and approved through the EU’s budgetary procedures. The budgetary authority will subsequently decide the actual level of funds used for repayment.

However, the auditors identify a more structural problem. Although issuances are planned through semi-annual funding strategies and programmes, by the time of the audit the Commission had not published a general strategy for repaying NextGenerationEU debt covering the entire period through 2058.

The Court recommends developing such a strategy, including refinancing risk, interest-rate risk, liquidity, market conditions and the constraints facing future budgets. For the portion of NGEU debt associated with grants, the auditors also call for criteria to determine what share of maturing debt will be refinanced and what share will actually be repaid.

The Commission accepted the recommendation and has set the end of 2027 as the deadline. The European executive says repayment profiles are already taken into account in semi-annual funding plans and that it will continue publishing regular information for investors and budgetary authorities.

Pressure on future budgets stems from the fact that the same financial resources must cover both new European policies and obligations arising from decisions taken during the pandemic. The larger the share of the budget ceiling used to pay interest and repay debt, the greater the pressure on Member States’ contributions, new sources of revenue or spending on other programmes.

The Court does not claim that the EU is facing a solvency problem, nor that the EUR 1 trillion represents exclusively NextGenerationEU debt. The warning concerns the pace of borrowing growth, financing costs and the need for its repayment to be incorporated transparently into budgetary decisions for the next three decades.