Auditors Express Concern Over Rising Trend of Erroneous EU Spending

October 11, 2024 TruthUSA

The European Court of Auditors stated that the increase was primarily due to errors in the allocation of EU funds aimed at enhancing development in less affluent regions.

The EU’s spending oversight body estimated that approximately 9.03 billion euros ($9.87 billion) from the union’s budget in 2023 was spent improperly, as per a report unveiled on Thursday.

With an “error rate” of 5.6 percent, this shows an increase from 4.2 percent in the prior year and 3 percent from two years ago.

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

The European Court of Auditors (ECA), which issued the annual review, labelled the rise as a “concerning trend” in a statement.

The ECA attributed the increase primarily to errors in the expenditure of cohesion funds—EU funds distributed to support less affluent regions.

Mistakes in investments intended for aiding development in the poorest regions of the bloc increased to reach 9.3 percent of spending, up from 3.6 percent in 2021, as funding streams were expiring.

Tony Murphy, leading the ECA, cautioned about the rapid rise in EU debt and informed reporters of his disapproval towards the EU Commission’s proposal to structure the bloc’s next seven-year budget after its post-COVID-19 recovery fund.

Under this plan, Brussels releases funds only upon countries meeting predetermined targets.

Murphy stated that such a model makes it “extremely challenging” to evaluate the efficiency of spending, as payments are not tied to specific projects.

“As we hit the midpoint of the 2021–2027 financial cycle, our annual report findings underscore significant challenges facing the EU budget, including heightened levels of irregular expenditure,” Murphy noted.

“These challenges emphasize the necessity for robust oversight and accountability mechanisms at both the member state and EU levels to preserve public trust and safeguard future EU budgets.”

Overlap between cohesion spending and the separate pandemic-era initiative known as the Recovery and Resilience Facility (RRF) occurred last year, and auditors suggested that time and capacity limitations linked to the RRF may account for the large number of projects receiving funding that ultimately proved to be ineligible.

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 remarked.

The RRF serves as the cornerstone 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 revealed that EU debt surged to 458.5 billion euros ($501.6 billion) in 2023, up from 348 billion euros ($380 billion) in 2022, largely due to NGEU borrowing.

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

“This signifies that the EU is now one of the largest debt issuers in Europe, although it remains uncertain whether the commission’s own resources proposal will generate adequate revenue to repay NGEU’s debts.”

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

In a statement, the European Commission acknowledged the extensive work done by the ECA, which it considers to offer valuable insights—but pointed out that its five-year mandate coincided with a “series of unprecedented crises.”

“The commission acknowledges the need for improvements and is taking appropriate action,” the statement expressed.

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

This marks the second occasion, within as many months, where the ECA has called attention to issues with EU spending.

Last month, it found that the bloc was still struggling to prevent migrants from Africa from illegally crossing, despite investing billions to address this issue.

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