Italy completes only €3.7bn of record EU fund

The Recovery and Resilience Facility (RRF), a €577 billion fund the EU created in 2021 to rebuild economies after Covid, hits its hard deadline on 31 August 2026. After that, no new milestones count. By 30 September, all payment requests must be filed. Unspent money disappears. About 58% of the fund has been disbursed to governments so far (European Commission, ING Think). The true bottleneck sits between a government receiving EU money and that money actually building a hospital or reaching a small business.

Italy collected the cash. The projects didn't follow.

Italy shows the pattern at its sharpest. Rome has collected €166 billion, or 85% of its €191 billion allocation, the EU's largest (Italian government). Yet Italy's Court of Auditors found only €3.7 billion in actually completed projects (upday, Il Resto del Carlino). The rest sits at various stages of bureaucratic processing. Thousands of small municipalities received funding but lack staff for procurement and oversight. Southern regions trail worst: Sicily at 22% payment rate, Calabria at 25%, versus Veneto at 47% (Il Foglio).

The administrative shortage meets a physical one. Construction costs have risen 40% since 2022, while the EU grants that fund these projects were set at 2021 prices (Legacoop Romagna). That math breaks contractors: they bid for a school renovation at one price, then watch materials eat the budget before the roof is on. The result was 13,500 insolvency proceedings in Italy's building sector in 2025 (Unioncamere). Every bankruptcy stalls the public works project behind it.

Further east, the picture is worse. Hungary has received just 9% of its €10.4 billion, with €9.5 billion frozen over rule-of-law disputes (Portfolio.hu). Romania faces potential penalties of €15 billion with 38 milestones unmet (DCNews). Bulgaria managed to absorb only 53% after cycling through seven governments since the plan was approved.

Survival by shrinking ambitions

Countries that look successful have often gotten there by lowering targets. Portugal avoided losing €2 billion by reprogramming its plan three times, dropping Lisbon and Porto metro lines, halving housing targets, and cutting healthcare beds by 40% (Eco/Sapo, Observador). It funnelled €964 million into a development bank whose loan programs require contract signatures, not project completion, to count as "executed" (Conta-la.pt). Portugal's own oversight body asked: "Are we sacrificing impact?"

Greece, which has drawn 68.5% of its €36 billion package, faces a different squeeze. Demand for its cheap RRF loans (interest at 0.3–1%) outstrips supply by €6–8 billion (News247). When those loans stop, businesses face market rates three to four times higher (Protothema).

A flaw baked into the design

The European Court of Auditors identified the core contradiction: the RRF pays for milestones, not actual costs. There is no mechanism to claw money back if a milestone was formally met but the underlying investment was never finished (ECA Special Report 13/2024, eucrim).

The deeper problem, as Bruegel (a Brussels-based economics think tank) noted, is that performance-based payments demand strong institutions (Bruegel). Romania, Bulgaria, and Hungary, the countries with the weakest administrations, are exactly those that need transformation most. The RRF was designed to close gaps. In practice, it has reproduced them.

The European Fiscal Board estimates RRF grants added roughly 0.25% of GDP annually to EU public investment, a boost that vanishes in 2027 with nothing replacing it (European Fiscal Board). The next EU budget cycle starts in 2028, and negotiators haven't agreed on whether a permanent investment tool should even exist. The only unknown now is how much money will vanish, and whether anyone will notice the hole it leaves.