NextGenerationEU, the European Union's €800 billion post‑pandemic stimulus, will cease disbursing funds at the close of 2026, leaving policymakers to assess a programme that delivered visible infrastructure but fell short of its economic ambitions.

The recovery package, launched in 2020 to accelerate a greener, more digital and more resilient Europe, financed projects ranging from Florence's tramway extension to Spain's electric‑car charging network and the connection of Greek islands such as Santorini to the mainland power grid. Yet, according to the European Court of Auditors, the total amount actually spent has shrunk to roughly €575 billion, with €95 billion of loans still unclaimed.

Why the fund has not been fully tapped

Strict eligibility rules have slowed the uptake of both grants and loans. Member states must meet a series of reforms, for example, changes to French and Spanish labour legislation, a revamp of Italy's court system and new renewable‑energy licensing procedures in Spain, before they can draw on the money. Many governments, already carrying high debt loads, have been reluctant to take on additional borrowing, preferring to preserve fiscal space.

As a result, three countries, Italy, Spain and Greece, have absorbed a disproportionate share of the resources. Italy received €195 billion, Spain €103 billion and Greece just under €37 billion, together accounting for three‑quarters of all loans and nearly half of the grants. The concentration of funding has prompted concerns that the programme has reinforced existing disparities rather than spreading benefits evenly across the Union.

Tracking the money proves difficult

Auditors have warned that the lack of a unified monitoring system makes it hard to verify where every euro has gone. By the end of last year, European prosecutors were probing more than 500 cases of alleged fraud linked to the recovery fund, underscoring the challenges of overseeing a rapid, large‑scale injection of public money.

Economists note that the bureaucratic hurdles have sometimes prevented projects from moving forward. In several instances, the required reforms were delayed or watered down, meaning that the intended green or digital upgrades could not be financed on time. This mismatch between policy ambition and administrative capacity has diluted the overall impact of the stimulus.

Economic impact: modest gains, uneven distribution

Official estimates suggest the programme added around 0.3 percent to EU gross domestic product in 2023. The European Commission's own calculations point to "spill‑over" effects, where investment in one sector stimulates demand in related industries. Countries that were already lagging in public investment, notably Italy, Spain, Greece and Portugal, recorded what the Institut Delors described as a "spectacular rebound" from the pandemic slump.

Germany, by virtue of its size, registered the largest absolute benefit, with an estimated €66 billion boost from €32 billion in loans and grants. Yet the overall growth figures remain modest: the German economy expanded by 0.2 percent and Italy by 0.5 percent in the same period.

"The economic impact, while tangible, wasn't significant enough to make it a huge economic game changer," said Eoin Drea, senior researcher at the Wilfried Martens Centre for European Studies, a think‑tank linked to the centre‑right European People's Party. He added that the fund's design flaws stemmed from the political urgency to act during the pandemic, rather than from a coherent long‑term strategy.

Political reverberations and future borrowing

The programme's mixed performance is already shaping the debate on the EU's fiscal future. Left‑wing politicians argue that the experience proves the Union can safely borrow on a larger scale to fund social and environmental priorities. In contrast, governments in Germany, the Netherlands, Denmark, Austria, Finland and Sweden have warned against a new wave of common borrowing, insisting that fiscal prudence must prevail.

These "frugal" states recently told the Commission that a substantial increase to the EU budget for 2028‑2034 is untenable, rejecting proposals for a fresh recovery fund. "New common borrowing is not the solution to our budgetary challenges," they said in a joint statement.

Nevertheless, the Commission is pressing for a larger multi‑annual budget to offset the loss of NextGenerationEU cash. With the fund set to run dry by 31 December, member states have until 30 September to submit final funding requests and until 31 August to implement any pending reforms. Hungary, for example, is moving quickly to secure the remaining €10 billion it is eligible for.

Repayment remains an open question

One of the most contentious issues is how the €800 billion of debt will be serviced. The original plan envisaged the European Commission raising additional revenue, including the sale of carbon‑emission allowances, but this requires unanimous approval from member states, a hurdle that has proven difficult to clear.

With many economies still wrestling with high public‑debt ratios, elevated energy prices and the fallout from trade tensions, the prospect of a coordinated repayment schedule appears uncertain. Some analysts warn that the sudden cessation of fund payments could strain national budgets, especially in countries that have already drawn heavily on the loans.

"The limited economic impact of the recovery fund may be dwarfed by its bigger political impact, and particularly because we don't even know how we're going to repay it yet, which I find incredible," Drea added.

What the end of the fund means for European workers

For workers on the ground, the programme's legacy is mixed. Infrastructure projects have created jobs in construction, engineering and renewable‑energy sectors, while the expansion of electric‑vehicle charging points and public‑transport upgrades have improved everyday mobility for commuters. However, the uneven distribution of funds means that many regions have seen fewer tangible benefits, reinforcing existing inequalities between richer northern economies and the more indebted southern states.

Trade unions across the continent have called for a clearer framework to ensure that any future borrowing translates into secure, well‑paid jobs rather than short‑term contracts. They argue that the EU's next fiscal step should be tied to strong labour standards, robust social protections and a genuine commitment to reducing carbon emissions, rather than merely expanding the budget.

As the EU prepares to close the book on its most ambitious borrowing exercise, the debate over how to fund Europe's green and digital transition is far from settled. The experience of NextGenerationEU will likely serve as a reference point for future discussions on joint debt, fiscal solidarity and the balance between rapid stimulus and careful oversight.