EU needs new money to cover budget shortfall: report

BRUSSELS

(AFP Photo)

Ballooning EU debt could blow a hole in the bloc's next seven-year budget if governments fail to agree on new sources of revenue, auditors warned on Oct. 8.

European Union capitals are locked in the usual battle between so-called "frugal" nations including Germany and higher-spending countries like France.

European leaders will discuss the 2028-2034 budget next week after Ireland, which holds the rotating EU presidency, presents the latest proposal on Oct. 10 that so-called "frugals" say must contain more cuts.

The EU executive proposed a budget worth around 2 trillion euros last year, including plans to raise money from new taxes on large companies, environmental taxation and levies on tobacco.

The European Court of Auditors (ECA) warned the EU economy is facing mounting pressure over the hundreds of billions of euros borrowed to support households and businesses during the COVID pandemic.

The EU's debt has "more than tripled in only a few years," reaching 739 billion euros by the end of 2025, Pierre Moscovici, a member of the European Court of Auditors, told reporters.

The auditors in the report warned: "The EU's rising debt burden could weigh heavily on future budgets. EU borrowing could reach one trillion euros by 2027, largely due to" the COVID recovery funds.

They said the EU would be spending up to 93 billion euros on interest payments alone because of the debt.