Auditors Say Erroneous EU Spending Has Become a ‘Concerning Trend’

A European Union flag flutters outside European Commission headquarters in Brussels on Feb. 1, 2023. Yves Herman/Reuters

The EU’s spending watchdog has estimated that at least 9.03 billion euros ($9.87 billion) of the union’s budget in 2023 was spent erroneously, in a report released on Oct. 10.

Representing an “error rate” of 5.6 percent, this marks a rise from 4.2 percent in the previous year and 3 percent from two years before.

The allowable threshold for the “error rate” is 2 percent.

The European Court of Auditors (ECA), which published the annual review, labeled the increase a “concerning trend,” in a statement.

The ECA said the rise was largely due to errors made in the spending of cohesion funds—EU cash handed out to bolster poorer regions.

Errors in investment intended to aid development in the bloc’s poorest regions rose to reach 9.3 percent of spending, up from 3.6 percent in 2021, at a time when funding streams were expiring.

Tony Murphy, who leads the ECA, warned about rapidly rising EU debt and told reporters he doesn’t care for the notion floated by the EU Commission to shape the bloc’s next seven-year budget in the image of its post-COVID-19 recovery fund.

Under that scheme, Brussels would only release money when countries hit pre-established targets.

Murphy said that model makes it “extremely difficult” to gauge if money is being well spent, as payments are not linked to specific projects.

“As we reach the midpoint of the 2021–2027 financial period, our annual report findings highlight critical challenges facing the EU budget, including high levels of irregular spending,” Murphy said.

“These challenges underscore the need for robust oversight and accountability structures at both the member state and EU levels in order to maintain public trust and safeguard future EU budgets.”

Last year, cohesion spending overlapped with a separate pandemic-era program known as the Recovery and Resilience Facility (RRF), and auditors suggested that time and capacity constraints related to the RRF may be to blame for the large number of projects that turned out to be ineligible after they'd already received funding.

There was “a lot of money there to be spent,” but “just throwing buckets of money at member states is not the ideal solution,” Murphy said.

The RRF is the centerpiece of Next Generation EU (NGEU), described as a “groundbreaking temporary recovery instrument to support Europe’s economic recovery from the coronavirus pandemic.”

The report also found that EU debt had jumped to 458.5 billion euros ($501.6 billion) in 2023, from 348 billion euros ($380 billion) in 2022, mainly because of NGEU borrowing.

“EU debt is now twice as high as in 2021 [when it stood at 236.7 billion euros],” the report states.

“This means that the EU is now one of the largest debt issuers in Europe, even though it is unclear whether the commission’s own resources proposal will generate sufficient revenue to repay NGEU’s debt.

“Additional costs for NGEU borrowing are estimated to range between €17 billion and €27 billion.”

In a statement, the European Commission said it “welcomes the ECA’s extensive work,” which “contains valuable insights,” but argued its five-year mandate had been marked by a “series of unprecedented crises.”

“The commission agrees that improvements are needed, and it is acting accordingly,” the statement read.

However, the spokesman said that “changing the approach to align with the ECA’s position halfway through the implementation period would be neither feasible nor consistent.”

This is the second time in as many months that the ECA has highlighted issues with EU spending.

Last month, it found that the bloc was still failing to stop migrants from illegally crossing from Africa, despite spending billions of euros to do so.