Error rates in EU spending have increased significantly, reaching levels not seen since the financial crisis according to a report by the European Court of Auditors (ECA). Errors in the EU’s €240 billion budget last year reached 5.6%, with the ECA offering an adverse opinion for the fifth consecutive year. The primary cause of errors was found in EU cohesion spending, particularly in investments meant for the development of the bloc’s poorest regions. This increase in errors was compounded by the overlap of cohesion spending with the Recovery and Resilience Facility, leading to a large number of ineligible projects receiving funding.
The ECA highlighted concerns regarding the Recovery and Resilience Facility, stating that it is problematic from an accountability and traceability standpoint. One-third of grant payments were found to be non-compliant, prompting the ECA to issue a yellow card, indicating a qualified opinion on the program. The report also noted the controversial Covid-linked joint borrowing program, Next Generation EU, which has made the EU one of the largest debt issuers in Europe. However, it remains unclear how the outstanding €460 billion will be repaid, with potential implications for future EU budget spending.
Ideas for new revenue sources for the EU have faced challenges, with member states expressing skepticism towards proposed new Brussels taxes on polluters or company profits. While auditors found the EU’s 2023 accounts to give a true and fair view, they raised concerns about errors and irregularities in the budget. The ECA reported 20 cases to the EU’s anti-fraud unit, OLAF, in 2023, up from 12 the previous year. The European Commission acknowledged the need for improvements in response to the ECA’s recommendations, noting the challenges posed by a series of unprecedented crises during its five-year mandate.
Despite the ECA’s findings, the European Commission contends that it has a robust assurance model in place to prevent, detect, and correct errors in EU spending. The Commission argues that it maintains an error rate below 2% for each accounting year and program, rejecting several of the ECA’s detailed recommendations. The Commission emphasized the need to adhere to the underlying regulations of programs like the Recovery and Resilience Facility, stating that changing their approach to align with the ECA’s position halfway through the implementation period would not be feasible or consistent.
The uncertainty surrounding the repayment of outstanding debts and the potential impact on future EU budget spending pose significant challenges for Brussels. The ECA’s report underscores the need for greater accountability and transparency in EU spending, particularly in light of the increased error rates observed. As member states continue to navigate complex and overlapping programs to access funding from the EU, addressing these issues will be crucial to ensuring effective and efficient use of resources. Additionally, finding sustainable solutions to generate new revenue sources and improve financial oversight will be essential in overcoming the challenges highlighted in the ECA report.
