Overview of EU Funding Plans#
UBS, a prominent investment bank, anticipates that the European Union (EU) will announce funding plans totaling between €170 billion and €180 billion for 2026. This update is expected when the EU reveals its borrowing strategy on Thursday. Notably, the EU has already allocated €45 billion to support Ukraine this year.
Current Financial Situation#
Despite the upcoming announcement, UBS does not foresee a significant impact on financial spreads. The EU is currently managing high cash reserves, averaging €77.4 billion in the second half of 2025, which is an increase from €71.1 billion earlier in the year. However, the disbursement of funds under the Next Generation EU program has been slow, with only €5.7 billion distributed from the Recovery and Resilience Facility by the end of April. UBS estimates that total disbursements may not surpass €100 billion in 2026.
Support for Ukraine#
On Wednesday, the EU Council finalized a €90 billion support loan for Ukraine, which was initially agreed upon in December 2025. This loan will be financed through EU borrowing in capital markets and is backed by the EU budget, with repayments expected from reparations owed by Russia to Ukraine. The loan is scheduled for disbursement in 2026 and 2027, with €45 billion allocated for 2026. Of this, €30 billion will be used for macroeconomic support, while €60 billion will enhance Ukraine’s defense industrial capabilities.
Disbursement Challenges#
Under the Recovery and Resilience Facility, only €395 billion of the targeted €672.5 billion has been disbursed so far. The pace of these disbursements has slowed, with a 29% increase in cumulative amounts in 2025 compared to the previous year, down from a 39% increase in 2024. UBS notes that the distribution of the Ukraine loan will likely be inconsistent, influenced by factors such as administrative capacity, progress on reforms, and readiness of contracts, rather than solely financial needs.