In its annual report for 2022, published on Thursday 5 October, the European Court of Auditors reveals a sharp increase in errors in spending financed by the EU budget. It also highlights the increased risks associated with borrowing to cover additional financing requirements, particularly in connection with the pandemic and the war in Ukraine, and recommends measures to mitigate the impact of high inflation on the EU budget.
EU budget
According to the report, expenditure financed by the EU budget (to the tune of €196 billion) has seen a marked increase in the error rate, reaching 4.2% in 2022, compared with 3% in 2021 and 2.7% in 2020.
With regard to the budget allocated to cohesion policy, the most important policy area in the EU budget, which represents 40% of the EU’s controlled expenditure, “we estimate the error to be 6.4%, compared with 3.6% in 2021, an increase of almost 80% from one year to the next “, explained the President of the Court of Auditors, Tony Murphy. “This is worrying not only for cohesion policy, but also because of its potential implications for similar types of spending, including the RRF (Recovery and Resilience Facility)”.
In addition, 66% of the expenditure audited is considered high risk due to the complexity of the rules and eligibility criteria.
Due to the overall level of error in EU budget spending for 2022, the auditors have issued an “adverse” opinion on expenditure. In addition, they identified 14 cases of suspected fraud, some of which were referred to the European Anti-Fraud Office (OLAF) and to the European Public Prosecutor’s Office.
Recovery and Resilience Facility
The RRF, which aims to mitigate the economic impact of the Covid-19 pandemic, also presented regularity issues in its second year of implementation, in 2022, resulting in a “qualified “ opinion on its expenditure.
Finally, the report highlights the impact of debt, which has risen to €344.3 billion in 2022 (compared with €236.7 billion in 2021), mainly due to the debt linked to the NextGenerationEU instrument, which amounts to €96.9 billion, as a result of the significant rise in interest rates in 2022.
The auditors also point out that the purchasing power of the EU budget could fall by almost 10% in 2023 due to inflation, and that the continuation of EU financial aid to Ukraine will further increase the exposure of future European budgets.
The auditors therefore stress the need for better risk management and improved controls to ensure that EU funds are used effectively.
To see the report: https://aeur.eu/f/8wl (Original version in French by Pauline Denys)