Milan: NextGenerationEU debt could push outstanding EU borrowing to 1 trillion euros by 2027, the European Court of Auditors warned in its annual report of 8 October 2026. Euronews reported that EU borrowing rose by more than 20 percent last year to 738.9 billion euros, driven mainly by the recovery programme. The auditors say the repayment plan has gaps, and they note that borrowing costs for the current budget period are now double the original estimates.

The numbers frame a long repayment calendar. The Union must repay NextGenerationEU debt between 2028 and 2058. For 2028 to 2034, the Commission proposed a fixed payment of 24 billion euros a year, with interest paid first. According to the report, interest alone could take about 93 billion euros of the 168 billion euros due over those seven years. Budget-backed liabilities could reach up to 664 billion euros by 2027.

The auditors question the missing strategy. They say no overall plan for repaying NextGenerationEU debt through 2058 has been published, which leaves lawmakers deciding the next budget without a full picture of the bill. President Tony Murphy said ambitious budgets demand equally ambitious safeguards. He also wrote that planned borrowing may require member states to increase their national contributions, which turns a technical audit finding into a political warning.

The report links NextGenerationEU debt to weak control of spending. The Court estimated that 3.8 percent of last year’s EU budget spending, excluding the recovery fund, breached the rules, up from 3.6 percent in 2024, against a threshold of 2 percent. It gave the accounts a clean opinion but issued an adverse opinion on spending for a seventh year. Under the recovery fund, 9 of 37 grant payments breached the rules, and the Commission paid anyway. More than 122 billion euros remained unpaid.

The Commission disputes the tone. It called its own error rate comparable to last year and significantly lower than in 2022 and 2023, and it said recovery spending carries a low level of risk because it checks milestones before payment. President Ursula von der Leyen cautioned against large cuts in the next budget. Leaders discussed financing at the summit of 15 and 16 October.

Why should the financial markets and treasuries care? Interest on NextGenerationEU debt competes with every other priority, from defence to cohesion, and the bill grows when rates stay high. The European Central Bank held its deposit rate at 2.50 percent on 29 October, which shows how costly new borrowing remains. Each additional point of interest widens the share of the annual payment that goes to lenders instead of programmes.

The next test is the budget talks for 2028 to 2034. If negotiators publish a full repayment strategy and tie payments more closely to results, NextGenerationEU debt could become a manageable legacy. If they leave the plan open, the auditors’ warning of a trillion euros will shape every argument about new own resources and national contributions.