EU budget faces shortfall without new revenue, auditors warn

The European Union's next seven-year budget could face a significant shortfall unless governments agree on new sources of revenue, the European Court of Auditors warned.

The warning comes as EU capitals argue over the 2028-2034 budget. European leaders are due to discuss the plan next week after Ireland, which holds the rotating EU presidency, presents the latest proposal on Saturday.

The European Commission proposed a budget worth about two trillion euros last year, including plans to raise money from new taxes on large companies, environmental taxation and levies on tobacco.

Pierre Moscovici, a member of the European Court of Auditors, said EU debt had more than tripled in only a few years, reaching 739 billion euros by the end of 2025.

The auditors warned that EU borrowing could reach one trillion euros by 2027, largely because of Covid recovery funds, and said the bloc could spend up to 93 billion euros on interest payments alone.

The court said that without agreement on new revenue, the EU budget could face difficult choices including higher national contributions and lower ambitions.

Under the Commission proposal, the EU would begin repaying Covid debt, while the European Parliament wants the debt rolled over. EU lawmakers also want to raise new money through taxes on digital giants and online gambling.

Member states and the European Parliament will negotiate the budget, with EU governments usually having the final say.