UBS expects the European Union's borrowing plan for 2026 to land in a range of €170-180bn when the bloc publishes its updated funding strategy on Thursday. The forecast takes into account the Council's recent finalization of a €90bn support loan for Ukraine and the EU's broader liquidity position.
The investment bank does not anticipate a prolonged reaction in sovereign or EU spreads following the announcement. UBS highlighted that the EU already holds substantial cash reserves, which carry a negative financing cost, and that outflows linked to the Next Generation EU program have been progressing slowly.
Analysts note the EU's average cash balance rose to €77.4bn in the second half of 2025, compared with €71.1bn in the year's first half. That cushion, UBS said, reduces immediate pressure to borrow beyond planned levels and helps explain its expectation that the update will not trigger a sustained widening of spreads.
Disbursements under the Recovery and Resilience Facility (RRF) have been limited to date. As of the end of April, only €5.7bn had been paid out under the RRF, and UBS projects that total RRF disbursements in 2026 will not exceed €100bn. Overall, €395bn of the targeted €672.5bn under the RRF has been disbursed so far.
The pace of RRF payments has slowed, with cumulative disbursements rising by 29% in 2025 relative to the prior year, down from a 39% increase in 2024. UBS said this deceleration underscores that financial commitments are not being converted into immediate outflows at the same tempo as earlier in the program.
On Wednesday, EU ministers finalized the mechanics for a €90bn support loan to Ukraine, a package the European Council approved in December 2025. The instrument will be financed through EU issuance on capital markets, covered by the EU budget, and is to be repaid out of reparations due from Russia to Ukraine.
The implementing decision outlines that the loan will be disbursed across 2026 and 2027, with €45bn scheduled to be made available to Ukraine in 2026. Of the total €90bn, €30bn is earmarked for macroeconomic support and €60bn is intended to bolster Ukraine's defense industrial capacities.
UBS cautioned that payments from the Ukraine loan are likely to be uneven. The bank stressed that disbursement timing will be driven by administrative capacity, progress on required reforms and contract readiness, rather than solely by financing needs.
Contextual note: The numbers and program descriptions in this piece reflect UBS's published expectations and the EU's implementing decisions as stated by officials. The article reports the disclosed figures and UBS's public commentary on funding and disbursement dynamics.