How next generation EU will be paid off

Key Points

• As part of Next Generation EU (NGEU), the European Union (EU) has borrowed funds for the first time to provide grants to member states. Starting in 2028, the EU will repay these borrowings from its budget.

• Under the 2020 Own Resources Decision, the member states have earmarked funds over and above what is necessary to amortise outstanding borrowings.

• Current discussions about the creation of new Own Resources to pay off borrowings for NGEU grants appear, for this reason, to be driven by institutional interests rather than financial necessity.

• It seems unlikely that member states will be compelled by the EU’s pandemic-related debt repayments to create additional sources of revenue for the Union’s budget.