Auditors flag increasing irregular spending in EU budget

The error rate in European Union budget expenditures reached a record high of 5.6% in 2023, according to the European Court of Auditors’ latest report, raising serious concerns over financial management and oversight. At the same time, the EU’s debt has surged, driven by massive borrowing for post-COVID recovery. 

The report, published Thursday, indicates that the error rate in EU spending has more than doubled from 2.7% in 2019. Much of this increase is attributed to the bloc’s cohesion policy, which is aimed at helping boost growth in Europe’s poorer regions. The error rate in this area spiked to 9.3%. 

The auditors pointed out that a major factor behind this issue is the so-called “absorption pressure” faced by member states as the end of the multi-year budget cycle approaches. In these final stages, there is often a rush to allocate remaining funds, leading to a higher chance of errors. Additionally, the flexibility granted to countries to reprogram funds and the COVID-19 pandemic increased room for mistakes.

The error rate does not necessarily indicate fraud or waste, but rather a failure to comply with EU or national rules on public procurement, state aid, or eligibility for subsidies. The report noted that the auditors referred 20 potential cases of fraud to the EU’s anti-fraud office, Olaf.

Adding to the concern is the EU’s rising debt, primarily due to loans taken to fund the post-COVID recovery package. The report states that the EU’s debt reached almost €460 billion last year, making the EU one of the largest issuers of debt in Europe. 

In response to these issues, the European Commission has proposed new sources of revenue to help repay the loans taken out under the COVID recovery plan. However, the auditors expressed doubts about whether these measures would be sufficient. “At the end of the day, it’s the member states that will be responsible for covering these debts,” Annemie Turtelboom, the Belgian member of the European Court of Auditors, noted. 

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